It’s a new year and i’m having a clearout and selling my personal things at car boot sales and online via gumtree.  I am also self-employed and complete a tax return, do I need to declare the income I receive from the sale of my personal goods on my return and be taxed for it?

The question you need to ask yourself is this: Is this additional income regular trading income with the view to making a profit?

On the face of it, no in this case, but each case must be considered on its own merit.

In this case, HMRC are unlikely to consider the sale of  unwanted second hand personal goods as trading activity as it is a one off activity, so the income received would not need to be declared on a self-assessment tax return.   It goes without saying that if you do not declare the income, likewise, you cannot declare any expenses related to the activity on your tax return.

The only time when you should declare the income is if you plan to sell second hand goods on a regular basis, for example monthly or quarterly , with a view to making a profit.  In this instance, HMRC would deem the income as trading activity and expect you to declare it on your tax return.

The good news is that if you decide that actually, on a regular basis you would like to sell online or at carboot sales as a sideline business, you can take advantage of the £1,000 trading allowance, which entitles you to your first £1,000 trading income tax free and with no need to declare via a tax return.

If you find that over time you start to earn above this £1,000 threshold, and you need to declare the income, you will have the choice to deduct the £1,000 allowance of your income or deduct from your business expenses (whichever is greater), to arrive at your taxable income for the year.  So this £1,000 trading allowance can still be used even when you surpass it.

If you are already self-employed, you may already be using this allowance, so please be careful when completing your tax return.

If you are looking for tailored advice on declaring income via your tax return, please do  get in touch.