Personal Finance

Will I get a tax bill on my eBay sales?

I’ve long been an avid user of eBay, selling items we no longer use. I work full-time and earn an above-average salary, but with a family of five, being able to earn a little extra on the side from eBay has been a very helpful supplement to our household income. I haven’t kept track of the amount I make each year but, after reading that HM Revenue & Customs is going to be looking into sellers on eBay, I worry I could be in the spotlight. Are there steps I could take now, and what action might HMRC take based on my eBay activity?

Headshot of Danielle Ford, partner and head of tax disputes and resolutions at chartered accountancy firm Haysmacintyre
Danielle Ford: keep a detailed record of your online sales

Danielle Ford, partner and head of tax disputes and resolutions at chartered accountancy firm Haysmacintyre, says like you, many users of eBay and other online selling platforms are concerned that HMRC is targeting them. We understand times are hard and many individuals sell unwanted possessions or even have a side hustle to help make ends meet, and recycling second-hand items is good for the environment. Platforms such as eBay and Vinted are convenient avenues to facilitate this.

First, we would like to reassure you that the circumstances you have described do not appear to constitute a taxable trade; we do not believe HMRC is seeking to pursue those who sell unwanted household items. The new rules are intended to target those who take advantage of online platforms to operate a side business hustle and not declare this to HMRC.

Trading income does not have to be declared to HMRC until the gross amount exceeds the annual trading allowance of £1,000.

The new rules affect all digital selling platforms, including Etsy, TikTok, Depop, Vinted and Airbnb. The UK has adopted the OECD’s model rules for reporting by platform operators, which provide the template for the collection of information by platform operators for provision to HMRC.

Data collection started on January 1 2024 and will be passed to HMRC from January 2025. The details collected will include personally identifiable information on the individual, details of sales proceeds and the number of transactions. Individuals with more than 30 transactions per year will be reported no matter the size of the proceeds.

Upon receipt of the information, HMRC will undertake a review, comparing the information to tax filings. Any further action will be based on those with income above £1,000, a significant number of transactions, or both. However, HMRC’s review process is not always perfect. In some cases, we expect those who are just selling their old clothes to receive a letter from HMRC.

Following review, we expect HMRC will issue nudge letters, a standardised communication asking individuals to review their tax affairs. In the most egregious cases, the tax authority could issue full inquiries and potentially commence criminal investigations.

To protect yourself, we recommend keeping a detailed record of your online sales, including all income and expenses such as postage costs, especially if your annual sales exceed £1,000. This will allow you to review your position and respond to HMRC should the need arise.

Even if you are not trading, a letter from HMRC should not be ignored. We have seen HMRC commence inquiries into those who have ignored nudge letters. We strongly recommend seeking professional advice on receipt of a nudge letter, due to the potential penalties involved.

Why haven’t I heard anything about my legacy?

My godmother died in November 2022. She had no children and always promised to leave my siblings and me a legacy. I downloaded her will from the government website which shows she left my two brothers and me £25,000 each and probate was granted in September 2023. We haven’t heard anything from the solicitors and I am too embarrassed to ask her husband who is the executor. What should I do?

Headshot of Precious Igbokwe, a senior associate in the private client team at RWK Goodman
Precious Igbokwe, a senior associate in the private client team at RWK Goodman

Precious Igbokwe, a senior associate in the private client team at RWK Goodman, says it’s understandable that you might feel hesitant to reach out to your godmother’s husband, especially if you’re uncertain about how to broach the subject. However, discussing matters related to a loved one’s estate is a normal part of the process and shouldn’t be seen as embarrassing. It’s also important to be patient and understanding because probate and estate administration can take time. Delays can occur for various reasons, including legal complexities or administrative hurdles, but when an excessive amount of time has passed without any communication, it would be reasonable to follow up. 

In your case it’s been over a year since your godmother died and five months since probate was granted, so I would suggest that you have an open conversation with your godmother’s husband who is the executor. You can express your concerns respectfully and politely, emphasising your desire to ensure that his wife’s wishes are carried out properly. Communication could be key to providing clarity and moving forward.

If you can’t face contacting the executor, you could reach out to the solicitors who are dealing with the estate administration. Look at the bottom of the grant of probate — it will confirm the name of the solicitor who applied for the grant of probate. The solicitors should be able to update you on the status of the probate process — or grant of confirmation as it is called in Scotland — and the distribution of assets. 

If you encounter any difficulties, consider consulting a solicitor specialising in probate and estate matters. They can provide guidance on your rights as a beneficiary and help navigate the legal process. For this reason, it’s important to document all communication and correspondence with the solicitors, executor and any other relevant parties.

Our next question

My husband has worked as a high-earning banker throughout our marriage, but since I told him I wanted a divorce he has quit his job and tells me he isn’t going to be able to afford to pay me maintenance. Can he get away with this?

In England and Wales an executor has a year from the date of death to administer the estate, including paying the cash legacies (known as pecuniary legacies) — this is known as “the executor’s year”. After this, statutory interest (currently up to 5 per cent) becomes payable on the pecuniary legacies.

In the unlikely event that the executor does not follow the terms of the will, as a beneficiary, you can apply to the courts to ensure the estate is administered properly. If the court finds evidence that the executor has not fulfilled their duties, the court can remove the executor and appoint a replacement to carry out the estate administration. The executor may be held personally liable for any losses incurred by the estate as a result of their actions.

Most executors take their responsibilities seriously and strive to fulfil their duties in a timely, responsible manner so while it may feel challenging, addressing the situation directly and seeking assistance when needed should reassure you and ensure your godmother’s wishes are honoured appropriately.

The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.

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