July Questions and Answers
Newsletter issue – July 2025
Q: I sometimes sell unwanted items online. Am I now liable to pay tax on any money I make?
A: There has been a rise in recent years of people selling old and unwanted items, particularly on digital platforms. If you do this on a casual basis, it is unlikely that you will need to pay any tax. The exception to this is if you sell a single personal item or collection for over £6,000 – HMRC will need to be informed to see if you need to pay Capital Gains Tax.
Some people buy and sell regularly on these platforms and HMRC considers that ‘trading’. However, if you make less than £1,000 a year, there is no tax due. If you’re making over that amount, HMRC will need to be informed. It is worth noting that online platforms are now obliged to share information with HMRC if you sell 30 items or more per year. But again, if you make less than £1,000 a year, you will not have to pay tax on it.
Q: For the first time in my life, I am paying tax on my pension. It is not a huge amount, but I am wondering if HMRC made a mistake, as my tax code has changed?
A: Without knowing your personal circumstances and the amounts involved, it is hard to say if HMRC has made an error. It is not infallible, though. You mention that you tax code has changed, so you should have received correspondence from HMRC explaining why this has occurred. If not, you should get in touch with them or you can, of course, engage with us to deal with HMRC on your behalf.
Given that the annual tax-free personal allowance of £12,570 is still frozen, it is probable that any increase to you pension income (state and private) has now taken you over the threshold. Many do not realise that pensions are taxable, and so you are likely now paying income tax on the proportion that is above £12,570.
Q: If the personal allowance is £12,570, why do I have to register as a sole trader if I’m making less than that each year?
A: This is an understandable question given that you do not need to pay tax on any money made below £12,570. HMRC’s rules state that if your gross annual income is over £1,000 then you must register as self-employed and submit a self-assessment tax return. This applies to individuals, not partnerships.
HMRC requires this so that it can check that sole traders are paying the correct amount of tax on their earnings, if applicable. They also need to maintain records on those who are trading for the purpose of providing the Government useful statistics on the state of the economy – how many sole traders are operating and how much they contribute to the economy, for example.