HM Revenue and Customs (HMRC) has issued a timely alert to Britons considering selling unwanted Christmas presents, warning they could face an unexpected tax bill if they breach specific rules.
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 figure to remember is £1,000. If your total income from 'side hustles' – including selling items for profit – exceeds this amount in a tax year (6 April to 5 April), you must inform HMRC.
This £1,000 threshold refers to your gross earnings, not your profit, and is calculated on top of your main employment income. If your total annual income, including your salary and side earnings, surpasses the personal allowance of £12,570, you may owe tax on the extra money.
When Selling Becomes Taxable
HMRC emphasises that casually selling your own unwanted belongings, such as old toys or clothes you received as gifts, usually does not require a declaration. The situation changes, however, if your selling activities constitute a trade or are done with the intention of making a profit.
You likely need to notify HMRC and may have a tax liability if:
- You buy items from charity shops or car boot sales specifically to resell them at a higher price.
- You upcycle furniture as a hobby with the plan to sell it.
- You create and sell goods like greetings cards or digital wall art online.
- You purchase wholesale bundles (e.g., vintage clothing) to sell individually for profit.
Capital Gains Tax on High-Value Items
There is another critical rule for personal possessions. If you sell a single item or a collection for more than £6,000, you might be liable for Capital Gains Tax. This could be relevant for an expensive gift you decide to sell.
HMRC's core message is one of caution: "Whether you get cash in hand or money paid straight to your bank account, you’ll need to tell HMRC so you can avoid any tax surprises." Failure to declare taxable income can result in a bill plus potential penalties.
The authority advises anyone unsure to check the detailed guidelines on the GOV.UK website to ensure they remain compliant while converting unwanted gifts into cash.
