eBay selling can start as a hobby and quickly turn into a genuine income stream. The question many sellers face is: when does it become taxable, and once it is, what do you need to do?
Is eBay Income Taxable?
It depends on your activity. HMRC distinguishes between:
Selling Personal Possessions
If you’re selling items you already own — old clothes, furniture, electronics — this is generally not taxable. You’re disposing of personal assets, not trading.
Trading Activity
If you’re buying items to resell, selling handmade goods, or regularly sourcing and selling stock, HMRC treats you as a trader and that income is taxable. HMRC’s full guidance on this distinction is at gov.uk/guidance/check-if-you-need-to-tell-hmrc-about-additional-income.
The £1,000 Trading Allowance
If your gross trading income from eBay is £1,000 or less in a tax year, you can claim the trading allowance and pay no tax on it. Above £1,000, you need to register and declare your income.
eBay Is Now Reporting Your Income to HMRC
Since January 2024, eBay is required to report seller income to HMRC under new digital platform reporting rules. If you’ve sold more than 30 items or your gross sales exceeded around £1,700 in a year, your data has been shared. This makes declaring income correctly more important than ever.
What Can eBay Sellers Claim as Expenses?
If you’re trading on eBay, your business costs reduce your taxable profit. Allowable expenses include:
- Cost of goods sold — what you paid for stock
- eBay fees and final value fees
- PayPal or payment processing fees
- Postage and packing materials
- Printing costs for labels
- Storage costs if you rent a unit
- Home office proportion if you work from home
- Mileage for sourcing trips at 45p per mile for the first 10,000 business miles
- Accountancy fees
Full HMRC guidance on allowable expenses is at gov.uk/expenses-if-youre-self-employed. For a detailed breakdown, see our guide to eBay seller expenses UK.
Do eBay Sellers Need to Register for VAT?
Only once your taxable turnover exceeds £90,000. Most individual eBay sellers are well below this, but larger operations should monitor their rolling turnover. Full rules at gov.uk/vat-businesses.
Get Help From a Specialist
At Simplr Accounting, we work with eBay sellers and online traders across the UK. We understand platform income, cost of goods calculations, and how to structure your records correctly.
Visit our accountant for eBay sellers page or book a free discovery call and we’ll take it from there.