Tax for eBay sellers: working out whether you are trading
Reviewed by Rob Webb, practising accountant since 2015 · Last reviewed September 2026 · Figures are for the 2026/27 tax yearReviewed by Rob Webb, practising accountant since 2015 · Last reviewed September 2026 · Figures are for the 2026/27 tax yearClearing out the loft? That's not taxable, however much it adds up to.
Buying things to sell on? That's trading, and once your sales pass £1,000 in a tax year you need to tell HMRC. If you do both from one account, you need to keep them apart.
Want to check your own costs? See what you can claim as an eBay seller →
Almost every eBay tax problem starts here, and the answer is about intent at the moment you acquired the item, not about how much you sold.
You are clearing out if the items were bought for you or your household to use. Old phones, the children's outgrown bikes, a deceased relative's record collection, the tools from a hobby you gave up. None of that is taxable trading income. There is no limit and no return to file on account of it.
You are trading if you acquired the item in order to sell it. Buying job lots at auction, retail arbitrage, importing to resell, buying broken consoles to repair and flip, buying pallets of returns. It is also trading if you make the thing you sell.
The grey middle is real, and it is where eBay sellers live. A few honest tests:
One "yes" does not settle it. A cluster of them does. If you restore and resell bikes every month, you are trading, even though each individual bike started as a private purchase.
If your account does both, split it. Sales of your own possessions are simply outside the tax system. Only the trading side goes on a return.
Here is a seller who buys clearance and returns stock and resells it, with no other income.
| 2026/27 | |
|---|---|
| Gross sales received | £48,000 |
| Cost of stock sold | £20,000 |
| eBay fees (final value, listing, promoted listings) | £4,800 |
| Postage and courier costs | £5,800 |
| Packaging materials | £600 |
| Working from home, 101+ hours a month at £26 | £312 |
| Mileage, 1,000 miles at 55p | £550 |
| Total expenses | £32,062 |
| Profit | £15,938 |
| Personal allowance | £12,570 |
| Taxable profit | £3,368 |
| Income tax at 20% | £673.60 |
| Class 4 National Insurance at 6% | £202.08 |
| Total due by 31 January | £875.68 |
Check the working: £48,000 less £32,062 of expenses is £15,938 of profit. Take off the £12,570 personal allowance and £3,368 is taxable. Income tax at 20% is £673.60. Class 4 National Insurance runs at 6% on profits between £12,570 and £50,270, so 6% of £3,368 is £202.08. Together, £875.68.
Class 2 National Insurance is no longer a compulsory weekly charge. Profits of £15,938 are above the Small Profits Threshold of £7,105, so it is treated as paid at nil cost and the year still counts towards the state pension.
Note how little tax £48,000 of sales produces, and note how much of that £48,000 is other people's money — stock, fees and postage account for over two thirds of it. This is why eBay sellers who panic at a turnover figure are usually panicking at the wrong number. Watch the other direction too: gross sales of £48,000 are getting close to the £90,000 VAT registration threshold, measured on a rolling 12 months.
| What you can claim | What to watch |
|---|---|
| Cost of the stock you sold | Only stock actually sold in the year. Unsold inventory is closing stock and is carried forward, not deducted now. This catches people who buy heavily in March. |
| eBay final value fees, listing fees, promoted listings, store subscription | Take these from your eBay fee invoices, not from your bank. eBay usually nets fees off before paying you, so your bank shows a figure already reduced. |
| Postage, courier accounts, Royal Mail, packing materials | Claim what you paid out, and include the postage your buyers paid you in your sales figure. Both sides go in, not neither. |
| Refunds, returns and cancelled sales | Deduct refunds from turnover rather than treating them as an expense, so the figures reconcile to your eBay reports. |
| Mileage to Post Office, drop-off points, auctions and wholesalers | 55p a mile for the first 10,000 business miles in 2026/27, then 25p. If you use the flat rate for a vehicle you must keep using it for that vehicle and cannot also claim capital allowances on it. |
| Repair parts, spares, cleaning and refurbishment costs | Fine where you repair stock for resale. Repairing your own possessions before a clear-out is not a business cost. |
| Storage: a self-storage unit, or the flat-rate home working allowance | Home flat rate is £10 a month for 25–50 hours, £18 for 51–100, £26 for 101 or more. It excludes phone and internet, which are claimed separately on a business-proportion basis. |
| Scales, thermal label printer, shelving, photography kit | Equipment of lasting value is usually a capital allowances claim rather than a straight expense. Keep the invoices separate from consumables. |
Turnover is the gross amount buyers paid you, including the postage they paid — not the amount that landed in your bank.
eBay deducts its fees, and sometimes postage labels and refunds, before paying out. If you take your turnover from your bank statements, you understate sales and simultaneously fail to claim the fees. The profit often comes out roughly right by accident, which is exactly why nobody notices. It stops being harmless the moment HMRC compares your return against the sales figure eBay reported, because your turnover will not match theirs.
Use eBay's own sales and fee reports for the tax year. Report gross sales as turnover, then claim fees and postage as expenses. The profit is the same, the figures are defensible, and the letter never arrives.
Nothing automatically. Online marketplaces are required to report seller information to HMRC once a seller passes the platform's reporting threshold. It is a reporting obligation on eBay, not a finding about you, and the threshold is set low enough to catch many people who owe nothing at all.
HMRC may write asking you to check your position. If you were selling your own possessions, reply saying so and keep whatever evidence you have — original purchase records, photos, the age of the items. If you were trading and have not registered, the sensible move is to bring things up to date voluntarily rather than wait. Unprompted disclosure is treated more favourably than a correction HMRC has had to prompt.
Do not register for Self Assessment simply because a letter arrived. Work out which side of the trading line you are on first.
Making Tax Digital for Income Tax applies to sole traders and landlords above the thresholds. It is tested on your previous year's return, on qualifying income — gross self-employment turnover plus gross property income added together, before expenses. Employment, pensions, dividends and partnership shares are excluded.
The seller in the example above, on £48,000 of gross sales, is in from April 2027. That is turnover, not profit, so a low-margin reseller can be inside Making Tax Digital while owing very little tax.
Once in, you keep digital records in compatible software and send quarterly updates: periods ending 5 July, 5 October, 5 January and 5 April, due 7 August, 7 November, 7 February and 7 May. Each update is cumulative, restating the year to date. The final declaration is still due 31 January. Turnover under £90,000 may use simple income and expense categorisation rather than full detail.
If you are clearing out the house, you need nobody. There is no return and no fee worth paying.
If you are trading below £1,000 gross, the same applies. If you are trading modestly with straightforward costs and no other income complications, HMRC's free online Self Assessment is perfectly capable and the return takes an evening once your figures are in order.
The point at which paying someone earns its keep is when stock valuations start mattering, when Making Tax Digital pulls you into four quarterly filings plus a final declaration, when you are close to the £90,000 VAT threshold, or when HMRC has written and you want the answer to be right the first time.
No. Those are inherited possessions being disposed of, not stock bought to resell, so it is not trading income. Individual high-value items can raise capital gains questions, which are separate and carry a £3,000 annual exempt amount in 2026/27.
Sales. It is £1,000 of gross trading income before costs. £1,400 of sales with £900 of stock costs is over the threshold, even though profit is £500.
Yes. It is part of what the buyer paid you, so it goes into sales — and the postage you actually paid out goes into expenses. Including one and not the other is the most common error we see.
Yes, considerably. Your personal allowance is usually already used by your salary, so eBay profit is taxed from the first pound, normally at 20% until your total income reaches £50,270. Class 4 National Insurance still only applies to self-employed profits above £12,570.
No. You take the flat £1,000 or your actual costs, whichever is better for you. For most genuine resellers actual costs are far higher, so the allowance is only useful to very small sellers.
Register and bring the earlier years up to date rather than waiting. Late filing carries £100 immediately, £10 a day after three months up to £900, then further charges at six and twelve months, and coming forward voluntarily is treated better than being found.
Filed Tax prepares eBay sellers' returns from your eBay reports, so gross sales and fees match what the platform told HMRC. The first month is free. It is £25 a month after that, covering all four Making Tax Digital quarterly updates, the final declaration, unlimited questions and deadline reminders. Rob Webb reviews every return before it is filed.
Rob is a Certified Xero Advisor with a BSc from the University of Salford. Last reviewed September 2026 against GOV.UK guidance current at that date. This guide is general information, not personal tax advice. Figures are for the 2026/27 tax year and can change at each Budget — always confirm the current numbers on GOV.UK or ask us to check your situation.