Home Business News Expert reveals the impact HMRC’s new tax rules will have on second hand sellers

Expert reveals the impact HMRC’s new tax rules will have on second hand sellers

by Thea Coates Finance Reporter
15th Jan 24 11:35 am

Given the rise in popularity in recent years, it’s not surprising that more and more people are turning to online marketplaces to sell their unwanted items.

As well as finding new homes for preloved fashion, selling platforms have also helped to contribute to the growth in second hand buying and sustainability.

However, HMRC are now planning to clamp down on second hand shoppers. From January 2024, sites such as eBay, Etsy and Vinted will have to provide HMRC with data on how much users are making and the fees they’ve paid, as well as personal details. From there, paying tax will only start once a user has earned a profit of more than £6,000 from selling goods.

Despite the introduction of the new rule, it appears that Ebay is still very much popular among consumers.

According to data from industry data platform Alt Index, the online website saw a 4.1 per cent surge in estimated monthly web page visitors over December 2023 (795,910,000), as well as a 0.6 per cent increase in app downloads.

Meanwhile, industry data experts have also predicted that the share price of eBay is set to increase in the next six months, with the current share price ($41.97) predicted to rise by 3.2 per cent by June 2024 ($43.09).

Seven tips to get your Self Assessment tax return right

A spokesperson for Alt Index said, “Despite HMRC’s new rules to clamp down on secondhand shoppers coming into effect this year, it seems that fashion conscious individuals are still utilising the site as a means to flog their unwanted items in the lead up to the rule change.

“In December, eBay saw an increase of 4.1 per cent in website traffic, proving that users are very much committed to supporting the second hand movement. The online marketplace has continued to see steady traffic over the past three months, with a 10.8 per cent rise in website visitors, while yearly website traffic has surged by 11.5 per cent. Meanwhile, eBay app downloads jumped up by 0.6 per cent last month.

“While it’s not yet known how HMRC’s new rules will affect websites such as eBay, industry experts remain hopeful as they predict the company’s share price will rise by 3.2 per cent by June 2024.”

Not everyone is convinced by new rules, with fashion blogger Monica Marriott-Mills labelling it a ‘step backwards’ for second hand buying. With her expertise and dedication to sustainability, the content creator has become a leading voice in the world of slow fashion.

Speaking in an exclusive interview with Alt Index, Monica shares her thoughts on the clampdown, why the rule could impact people’s decisions on recycling, and why she believes there is a responsibility to support and encourage the second hand industry.

‘Less people will turn to recycling for fear they’re potentially doing something wrong’

“Whilst I see the reasoning behind this decision, I believe it’s a step backwards given the state of the climate’s decline. I would think, encouraging and supporting sustainable/circular business practises would be of high priority. It seems a shame to put focus on individuals selling their second-hand unused items, as these are the types of practises that we need more of.

“I think the other concern for me is the confusion that it’s caused amongst those that sell online. The HMRC guidance states that if you buy goods for resale, or make goods with the intention of selling them for a profit, ‘then you are likely to be trading and will have to pay tax on your profits.’ But I do worry, despite this differentiation, that this news is going to put people off selling their unused items, and thus, result in less people recycling for fear they’re potentially doing something wrong.”

‘There’s a responsibility to support and encourage the second-hand industry’

“I do think it’s a stepback in terms of sustainability. I think that there’s a responsibility to support and to have rules in place to grow and encourage the second-hand industry. Whilst I appreciate that the tax is for those who are actively trading eg. Buying with the intention to sell, it’s a shame that after all of the hard work of eco-activists, that this is the sector they have decided to drill down on.”

‘Paying tax again for an item is unfair – it’s important to be selling through online marketplaces’

“It’s hard to say whether the new rules will affect online marketplaces such as eBay and Vinted. I don’t think it will reduce the number of people, but I do think people will be more tentative to sell their higher priced items perhaps. I think it could result in people opting for private sales of their higher ticketed items, like bags and jewellery. The items they own, they’ve already paid tax on, so it seems unfair that they’re going to be taxed on items that may be slightly higher in price (taking them over the tax fee threshold).

“I’m sure there are many non-traders out there that have unworn luxury bags, clothing, household items and jewellery that they have bought with the intention to use as a consumer, but perhaps have grown out of them or no longer use, who will now consider alternative routes to selling these items.

“Although I don’t use these sites to sell, I do use them to buy items and I suspect this could bring down the calibre of what’s available online. Many sellers use sites like Vinted and Depop as they protect both the buyer and seller, the benefits include things like Reviews, Buyer Protection and Easy to track postage/prepaid postage, so it’s important to be selling through apps like these.”

Leave a Comment

You may also like

CLOSE AD

Sign up to our daily news alerts

[ms-form id=1]