Do new tax rules mean cyclists selling their bikes on eBay will now have to do a tax return?

2024 began with the news that digital platforms such as eBay, Etsy and Vinted will now have to collect extra information about the people who sell using their websites and apps and share it with HMRC, sparking concerns among sellers, side-hustlers, and New Year garage-clearers that they could end up paying more tax, or at least have to spend time and effort on a self-assessment tax return.

Rumours (incorrectly) spread online of a new tax for people using re-selling sites to earn a bit of money on the side and, with such a busy second-hand market for bikes and components, some may have been left wondering if this applies for those of us using the internet to clear our wardrobes of those old jerseys, and occasionally maybe even selling a bike or two.

The bottom line is there is no new tax. As it was before, online sellers have a £1,000 annual trading allowance from selling personal items, and only after exceeding that will tax need to be paid on profits; the key word here being 'profits', i.e. if you're selling a bike for less than you paid for it (or potentially more, but didn't sell with the intention of making a profit) then this doesn't apply to you, even if you've sold a bike for considerably more than £1,000. 

> Your complete guide to buying a second hand bike

What has changed, however, is that HMRC will now be getting more information, such as how many sales a user has made, from websites and apps to more easily identify people using the platforms who will need to pay tax on profits exceeding £1,000.

This information-sharing used to be accessed from online platforms by HMRC when required, now it will be automatic and also includes overseas platforms.

We spoke to Nadia Price, an accountant at Link Stone Advisory, for the full rundown...

"HMRC's new visibility into online marketplace receipts may be giving a few people qualms about selling on possessions in places such as eBay or Facebook," she said. "Realistically, though, as long as you have good records, there should be nothing to worry about. 

"HMRC has not been given any new tax-raising powers, just an increased level of insight to highlight where it should be asking questions, in case people have made more than £1,000 trading income.

 "They are particularly looking for individuals carrying on a trade — this is more significant than the occasional sale or purchase, and is likely to be associated with regular transactions, the intention to make profit, or a short period between buying and selling items.

"HMRC has nine of these so-called 'badges of trade' but they are very much common sense. Clearing out your attic for the first time in ten years, even if you make more than £1,000 on that occasion, will not be trade. Filling your garage with bric a brac regularly at car boot sales and then clearing it out every six months or so, is much more what HMRC is looking out for.

 "You may happen to sell a very expensive item (sales proceeds over £6,000), in which case you would also need to consider whether you should pay Capital Gains Tax. Capital Gains Tax only applies if you made a profit on the item, and personal possessions, including machinery, with an expected life of under fifty years are also excluded.  Note the 'personal', though — as soon as you have used an item in your business (e.g a camera) — it's chargeable.

"As with all potential dealings with HMRC, make sure you have kept good records of when you bought and sold items and for how much. HMRC has a useful link for you to check whether you are likely to need to pay tax on additional sources of funds: check if you need to tell HMRC about additional income — GOV.UK (www.gov.uk).  And as always if something is particularly large or unusual, it is well worth taking specific professional advice."

According to Martin Lewis's MoneySavingExpert website, firms will only pass on data to HMRC automatically if users are selling 30 or more items a year or have total earnings over the equivalent of €2,000 (£1,720). Of course, if you are making more than £1,000 a year from selling then you may still have to pay tax on profits exceeding that, regardless of if you meet that threshold for data being automatically passed on.

To conclude: no, you don't have to worry about doing a tax return if you're planning to sell your bike. If you build bikes up to sell for profit and that profit totals more than £1,000 a year then it's a different matter, but anyone in this business will most likely already know that their profits are taxable. If you regularly buy bikes and gear and sell them on when you no longer want or need them, it's a good idea to keep records of your original purchases just in case the sales are ever queried.