Income Tax

Do you need to pay tax on the sales you make?

If you are just selling some unwanted items that have been lying around in the attic, the answer is probably no.

In order to pay tax on the goods you sell, you either have to be trading or make a capital gain. If you are trading you will be self-employed.

How to decide if you're trading or not?

Generally, you are trading if you:

  • sell goods you have bought for resale
  • make items yourself and sell them, intending to make a profit
  • sell (or buy) goods on behalf of others for financial gain (for example on commission)
  • provide a service and receive payment (whether in cash or in kind)

If you are trading you may have to pay Income Tax, National Insurance Contributions and VAT, and HM Revenue & Customs (HMRC) will treat you as self-employed in that trade.

But you are not trading if you:

  • sell occasional, unwanted personal items through internet auctions or classified advertisements
  • attend a car boot sale once a year to sell unwanted household items

Even if you don't need to pay Income Tax you should still check if you need to pay other taxes or duties.

Essentially, 'trade' is a two-way relationship between a trader and a customer, where the trader provides goods or services to the customer for reward on a commercial basis.

To help decide whether a trade exists or not the courts have identified '9 indicators or badges'. It is not always easy to decide even using these 'badges', because a trade may exist even if only 1 or 2 of the indicators are present.

Follow the link below to read some helpful trading examples.

The badges or indicators of trading

Examples to help you work out if you are trading

Help and support

There's a wide range of help and support available from HMRC. Follow the links below for more guidance on:

Am I trading or not? (Opens new window)

Simpler Income Tax - cash basis and simplified expenses (Opens new window)

Help and support for businesses

How to tell HMRC about undeclared income

If you need more help to know if you are trading, follow the link below to contact HMRC for help.

Further advice - helplines