If you are just selling some unwanted items that have been lying around in the attic and your home the answer is probably no, as in order to pay tax on the goods you sell, you either have to be trading or make a capital gain.
You are likely to be treated as trading if HMRC consider you to be purchasing or making goods for resale with the intention of making a profit, or if you are selling goods for third parties and receive commission on the sales.
If you only sell occasional, unwanted personal items through internet auctions, car boot sales and classified advertisements then it is unlikely they will view you as being self-employed. This is due to the fact that in most cases where you sell second hand goods, the amount you receive rarely exceeds the original price you paid for them and as tax is only chargeable on the profits made, no tax would be chargeable.
Likewise, capital gains tax is only charged on gains you made on the sale of certain assets and therefore if you sell an item for less than you purchased it for, you will not make a gain and no capital gains tax will be payable. You only have to pay tax if the items you sell have increased in value during the time you have owned them. The items you sell are likely to be personal effects or goods, known as chattels, which are individually worth less than £6,000 when you dispose of them. Such items are exempt from capital gains tax and it is therefore very unlikely you will make a gain that is chargeable to tax.
If you are concerned that your situation may be considered to be trading, you should discuss this with your local TaxAssist Accountant, as there is a late registration penalty if you do not advise HMRC within 3 months of commencing a new trade.
By Jo Nockels
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