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Capital Gains Tax (CGT) may be payable when an individual sells an asset that has increased in value since they acquired it. In the context of eBay sales, CGT could be applicable if the item sold is considered an asset and its value has increased significantly since the purchase.
However, not all eBay sales are subject to CGT. Here are some scenarios in which you may not have to pay CGT on eBay sales:
- Personal possessions (chattels) worth less than £6,000: Chattels are tangible movable property, such as furniture, antiques, or personal items. If you sell a chattel for less than £6,000, you usually do not have to pay CGT on the gain. Note that this £6,000 threshold applies to the sale price, not the gain.
- Wasting chattels: Wasting chattels are tangible movable assets with a predictable useful life of 50 years or less. Examples include cars, boats, or equipment. Wasting chattels are exempt from CGT, regardless of their sale price or realised gain.
- Occasional sales: If you occasionally sell personal items on eBay that you have used and you are not trading, it is unlikely that you will need to pay CGT or income tax on these sales.
However, if you frequently buy and sell items on eBay with the intention of making a profit, HMRC may consider this activity as trading, and you may be required to pay income tax on your profits rather than CGT.
HMRC provides guidance on CGT and the chattel exemption in the Capital Gains Manual, available on the UK Government website. However, for specific guidance on the CGT treatment of eBay sales, it is essential to consult the most up-to-date guidance and seek professional advice if necessary, as rules and regulations can change over time.
In summary, you may need to pay Capital Gains Tax on an eBay sale if the item sold is considered an asset and has significantly increased in value since you acquired it. However, exemptions apply to personal possessions worth less than £6,000, wasting chattels, and occasional sales of used personal items. It is crucial to consult HMRC guidance and seek professional advice to ensure compliance with tax rules and regulations.
You can call us to discuss your personal circumstances with our specialist tax advisors.