“Do I have to declare eBay sales?” is still one of the most-Googled tax questions we hear from clients. Online trading has exploded since 2020 and HMRC’s data‑matching tools now receive quarterly feeds straight from platforms such as eBay, Vinted and Etsy. Add a frozen personal allowance, a higher VAT threshold and the promise of simpler tax returns, and 2025/26 looks very different from a few years ago. In this post, we break down what really matters, using current figures and plain language to keep you on the right side of the rules.
According to the Office for National Statistics, 1.317 million people now hold a second job – 3.9% of everyone in work (ONS, 2025). That’s a lot of side‑hustlers, many of whom sell through eBay. If you’re one of them – or you advise people who are – read on.
Hobby or trade? HMRC’s ‘badges’ of trade
Before tax rates even enter the picture, the key question is whether you are trading or simply selling unwanted items. HMRC looks at several indicators, informally called badges of trade:
- Intention: Did you buy stock purely to sell for a profit?
- Frequency: Are sales regular and organised?
- Improvement: Have you repaired, up‑cycled or repackaged items to add value?
- Marketing: Do listings read like a shop window with paid promotions or bulk discounts?
- Separation: Do you keep separate bank accounts or business records?
Score highly on two or more and HMRC is likely to view you as running a business – and the rules below apply.
The £1,000 trading allowance – small but mighty
Every individual enjoys up to a £1,000 tax‑free trading allowance each tax year. If your total sales income for 6 April 2025-5 April 2026 is below that figure you can usually ignore self assessment altogether, provided you have no other untaxed income. HMRC is currently consulting on raising the reporting threshold to £3,000, a move predicted to take 300,000 taxpayers out of the annual tax‑return cycle (HMRC, 2025). Until legislation passes, the £1,000 limit remains in force.
Remember:
- Gross receipts: The £1,000 is measured before eBay fees, postage or costs.
- One allowance per person: Spouses or partners can each claim it if the sales are genuinely theirs.
- Voluntary filing: You can still file a return to carry forward losses or claim expenses if they exceed £1,000.
If you breach the limit you must register for self assessment by 5 October following the tax year of first trade.
Income tax, National Insurance and VAT on eBay sales
Once you move beyond the allowance, you pay tax on profit: income less allowable expenses such as eBay fees, packaging and a share of home office costs.
- Income tax bands: The personal allowance remains at £12,570 and the basic rate band runs up to £50,270 for 2025/26.
- National Insurance: Class 2 NI is £3.45 per week and becomes payable when profits exceed £6,725. Class 4 kicks in at 9% on profits above £12,570 and 2% above £50,270.
- VAT: The registration threshold rose to £90,000 of taxable turnover on 1 April 2024 and is unchanged for 2025/26 (HMRC, 2024). If your rolling 12‑month sales pass this figure, you must register – even if profits are low.
Platform reporting and HMRC’s data feed
Since the introduction of the OECD Model Reporting Rules, eBay must report UK seller data where either:
- annual sales exceed €2,000 (about £1,700), or
- more than 30 transactions occur in a year.
HMRC receives the feed each January and automatically cross‑checks it against self assessment records. If a return is missing, an enquiry letter is triggered. We have already seen clients contacted where figures differed by less than £100 – the compliance net is tight.
Record‑keeping tips that protect your cashflow
Good bookkeeping saves tax, reduces stress and protects your cashflow. Aim for:
- Digital tracker: Spreadsheet or cloud app that logs date, item, sale price, postage income, postage cost, eBay fees and net proceeds.
- Receipts folder: PDF or photograph every supplier invoice and postage receipt.
- Monthly review: Reconcile PayPal or bank payouts against listings.
- Year‑end sense check: Compare total PayPal/eBay payouts to declared turnover – HMRC will.
With Making Tax Digital for Income Tax now scheduled for 2027, starting digital records early is a smart move.
Common myths we hear about eBay income
- “I’m only decluttering, so profits don’t matter”: Regular buying to resell is trading, even if it started with a clear‑out.
- “eBay already takes tax”: eBay collects VAT on selling fees, not on your income tax.
- “Cash sales are invisible”: Marketplace payments pass through banks and PayPal, creating a clear audit trail.
- “I can offset my full mortgage”: Only a reasonable share of household costs is allowable and only while you trade.
Do I have to declare eBay sales if I only sell unwanted items?
If you sell personal possessions you owned and used – old phones, clothes, sporting gear – the activity is normally exempt. One caveat: if any single item (or set) sells for more than £6,000 you may face capital gains tax, not income tax. HMRC’s online checker is a quick way to confirm.
How we help eCommerce owners sleep at night
Our dedicated eCommerce accounting team integrates eBay, Shopify and Amazon data directly into cloud bookkeeping, giving you real-time profit and VAT snapshots. We also handle registration, quarterly reviews and year-end filings, freeing you to focus on listings rather than ledgers. If you need wider support, explore our tax planning services and contact us for a bespoke quote.
Whether you clear out the attic occasionally or run a thriving reselling business, one thing is constant: HMRC expects accurate, timely reporting. As allowances freeze and data sharing tightens, understanding how the £1,000 trading allowance, income tax bands, National Insurance and the £90,000 VAT threshold interact can be the difference between a healthy profit and an unexpected bill. Keeping clear digital records, registering as soon as you breach the limits and claiming the right expenses will protect both your cashflow and your peace of mind.
And when life gets busy, letting specialists take over the compliance frees you to focus on sourcing stock and delighting customers, rather than wrestling spreadsheets at midnight. We help hundreds of eBay sellers each year to file on time, minimise tax and plan for growth – and we’d love to help you, too.
Still wondering, do I have to declare eBay sales? Speak to us today – we’ll clarify your position, optimise your allowances and keep HMRC off your back.
