Telephone iconCall UsTelephone icon0333 0146 683
Our opening hours
Chevron left icon
Knowledge centre

A guide to tax for online sellers

2-minute read

Anna Delves

18 August 2020

Facebook iconTwitter iconLinkedIn icon

Setting up as an online seller is a great option for people who are already small business owners as well as those looking to get started – particularly in the wake of Covid-19.

Unfortunately, like with offline businesses, there are taxes you need to pay – and the government is considering a new 2% sales tax for online businesses.

We’ll guide you through the taxes you may need to pay as an online seller so you can make sure you’re set up for success.

Do I need to pay taxes if I’m an online seller?

If you’re self employed in any capacity, you'll need to register with HMRC and complete an annual Self Assessment Tax Return, and that includes being an online seller.

However, there are times where you might sell online and it's not as part of your business activity – for example, if you’re doing a few one-off sales on sites like eBay to shift possessions you no longer need or want, or to raise emergency funds.

In cases like that, you won’t need to pay tax as a self-employed person.

How much can you sell before you have to pay taxes?

As of 2017, you’re allowed to earn up to £1,000 in online sales before you need to pay tax.

This doesn’t just apply to eBay, but to other selling platforms such as Gumtree, Depop and Etsy.

In 2016, the Finance Act empowered HMRC to look into those who’re selling online. The aim is to crack down on those who’re evading tax through online selling.

If HMRC class you as an online seller, you will need to pay income tax on your earnings.

Get the latest guides for small businesses and the self-employed straight to your inbox

Your email address will be used by Simply Business so that we can send you the latest guides, offers and tips. You can unsubscribe from these emails at any time. For more information, check out the Simply Business Privacy policy.

New online sales tax

At the moment, the government are considering a new 2 per cent sales tax for online sellers.

The aim is to give the high street a boost by giving brick-and-mortar shops a slight price advantage.

Another idea they’re considering is charging home delivery customers a surcharge for having online goods delivered.

Both are part of a wider review into business rates, which the government launched as a consultation in July. The consultation will close in September, after which any changes they decide to make may then be introduced by Spring 2021.

What other taxes might I have to pay as an online seller?

Depending on how your business is set up, the taxes you may have to pay are:

  • Income tax
  • Corporation tax
  • National insurance contributions
  • VAT
  • Employers' PAYE
  • Business rates

You can find out when and why you might have to pay each of these in our full guide to tax for small businesses

How do you find the tax process for online sellers? Let us know in the comments.

Ready to set up your cover?

As one of the UK's biggest business insurance providers, we specialise in public liability insurance and protect more trades than anybody else. Why not take a look now and build a quick, tailored quote?

Start your quote

We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

Find this article useful? Spread the word.

Facebook icon
Share
Twitter icon
Tweet
LinkedIn icon
Post

People also liked

12 March 20202-minute read

What the UK Budget 2020 means for landlords

Chancellor Rishi Sunak announced the first UK Budget since October 2018 amid continuing political and economic uncertainty. Here’s the key…

Read more

Keep up to date with Simply Business. Subscribe to our monthly newsletter and follow us on social media.

Subscribe to our newsletter

Categories

Popular articlesBusiness resources from FarillioGeneral businessGuestInsuranceLandlordLandlord resources from FarillioLegal and financeMarketingNewsOpinionProperty maintenanceTradesmanCovid-19

Address

6th Floor99 Gresham StreetLondonEC2V 7NG

Sol House29 St Katherine's StreetNorthamptonNN1 2QZ

© Copyright 2020 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.