HM Revenue and Customs (HMRC) has issued a timely warning to Britons considering selling unwanted Christmas presents, urging them to check tax rules to avoid potential penalties.
The £1,000 Side Hustle Threshold
In a social media post on platform X, the tax authority clarified that while selling personal items like used clothes or an old television typically does not incur income tax, there are important limits. The key rule revolves around the £1,000 annual trading allowance. If your total income from 'side hustles' – including selling items for profit, tutoring, or dog walking – exceeds this amount in a tax year, you must inform HMRC.
The tax body emphasised that this £1,000 figure refers to gross income, not profit, and applies to money earned on top of your main employment. The tax year runs from 6 April to 5 April.
When Selling Becomes Taxable
HMRC outlined specific scenarios where individuals likely need to declare income and may face a tax bill. These include:
- Buying items from car boot sales or charity shops with the intention of selling them for a profit.
- Upcycling furniture as a hobby with the aim of selling it.
- Selling handmade goods like greetings cards or digital designs online.
- Purchasing wholesale bundles of vintage clothing to resell individually for profit.
However, the authority was keen to reassure the public that selling personal belongings occasionally, such as old toys, clothes, or unwanted gifts, usually does not require a declaration to HMRC.
Capital Gains on High-Value Items
A separate rule applies to high-value personal possessions. HMRC stated that you only need to inform them if you sell a single personal item or a collection for more than £6,000, as this could potentially trigger a Capital Gains Tax liability.
For most people simply offloading a few disappointing Christmas gifts online, there will be no tax to pay. The reminder serves as a precaution for those whose selling activities might cross into what HMRC views as a trading venture. The government advises anyone unsure to check the detailed guidelines on the official GOV.UK website to avoid an unexpected tax bill or penalty.
