The good news is that most people simply selling their own unwanted possessions on Vinted will not have to pay Income Tax on their sales.

However, the position can be different if you are buying or making items specifically to sell for a profit.

There has also been considerable confusion about Vinted and other online marketplaces reporting sellers' information to HMRC. This does not mean that everyone selling on Vinted suddenly has to pay tax.

Here's how the rules work.

Do you pay tax for selling your old clothes on Vinted?

Usually, no.

If you are simply clearing out your wardrobe and selling clothes that you originally bought for yourself, HMRC says you probably will not have to pay Income Tax on the money you receive.

For example, imagine you bought a coat for £150 two years ago but no longer wear it. You sell it on Vinted for £50.

You haven't started a business simply because you sold the coat. You are disposing of one of your personal possessions, and there would normally be no Income Tax to pay.

The same principle can apply if you sell a large number of your own unwanted clothes. There isn't a rule saying that selling a particular number of your own possessions automatically makes you a business.

HMRC itself gives the example of somebody clearing unwanted possessions from their attic and says that, provided none of the items individually raises the separate Capital Gains Tax issue discussed below, it is unlikely they would need to report the income regardless of how many items they sell.

When could Vinted sales become taxable?

The position changes if what you're doing amounts to trading.

One of the clearest indicators is buying goods with the intention of reselling them for a profit.

For example, suppose you regularly:

• buy discounted clothing specifically to resell on Vinted;
• source items from charity shops or car boot sales to sell at a higher price;
• make products specifically to sell online; or
• operate your Vinted account as an ongoing profit-making activity.

You may be trading rather than simply selling your personal belongings.

HMRC specifically gives the example of someone buying items from charity shops and car boot sales and regularly reselling them online for more than they paid. That person may need to report the income.

What is the £1,000 Vinted tax rule?

This is another area where there is a lot of confusion.

There isn't a special £1,000 Vinted tax.

Instead, the UK has a £1,000 trading allowance.

If you are actually trading, you need to consider your total gross trading income from all relevant trading activities, not just your Vinted profit.

If your annual gross trading income is £1,000 or less, the trading allowance may mean that you do not need to tell HMRC about it, subject to certain exceptions. If your gross trading income exceeds £1,000, you will generally need to tell HMRC.

Importantly, the £1,000 test relates to income before expenses, rather than profit.

For example, if you buy clothes specifically to resell and receive £1,400 from customers during the tax year, the fact that the clothes originally cost you £900 doesn't reduce your gross trading income to £500 for the purposes of deciding whether you've exceeded the £1,000 threshold.

I've sold more than £1,000 of my own clothes. Do I need to pay tax?

Not necessarily — and this is probably the most important distinction in this article.

The £1,000 trading allowance does not mean that everyone who receives more than £1,000 through Vinted has become taxable.

If you sell £1,500 of clothes from your own wardrobe that you originally bought for your personal use, that is very different from buying £1,500 worth of stock specifically to resell.

You first need to establish whether you're trading.

Simply selling your unwanted personal possessions will not normally amount to a trade. 

Does Vinted report my sales to HMRC?

Online platforms can be required to collect information about sellers and report it to HMRC.

Under the digital platform reporting rules, a seller of goods is generally excluded from the platform's reporting where they make fewer than 30 sales and receive less than €2,000 (approximately £1,700) during the calendar year.

This reporting threshold is often confused with the tax rules.

They are not the same thing.

A platform reporting information about you to HMRC does not mean that you owe tax. HMRC explicitly confirms this.

You could therefore have your details reported to HMRC while having no Income Tax liability at all because you were simply selling your own unwanted possessions.

Equally, somebody could have taxable trading income even if their activity did not result in a platform report.

What about expensive items sold on Vinted?

There is another tax to be aware of: Capital Gains Tax (CGT).

Personal possessions can potentially fall within the CGT rules where an individual item is sold for £6,000 or more. There are specific rules for sets of items as well.

That's unlikely to affect somebody selling ordinary second-hand clothing, but it could become relevant to particularly valuable items such as jewellery or certain collectibles.

Do I need to register for Self Assessment because of Vinted?

If you're merely selling your own unwanted possessions, usually not.

If you're trading and your gross trading income exceeds £1,000 in the tax year, however, you will generally need to tell HMRC and may need to register for Self Assessment.

Remember that you need to consider income from your other trading activities as well.

So, for example, if you earn £700 buying and reselling items online and another £600 from a separate side hustle, you shouldn't simply look at the Vinted income in isolation.

So, do you have to pay tax on Vinted sales?

For most people having a wardrobe clear out, no.

The important question isn't simply 'how much did I sell on Vinted'. It's 'am I selling my own unwanted belongings, or am I buying and making things with the intention of selling them for a profit?'.

If it's the former, there will usually be no Income Tax to pay.

If it's the latter, you may be trading and will need to consider the £1,000 trading allowance, whether you need to register for Self Assessment and whether any tax is due.

And if Vinted tells you that it has reported your information to HMRC, don't assume that means you have a tax bill. Platform reporting and tax liability are two separate things.

Need help with income from a side hustle?

If your online selling has developed into more than simply getting rid if unwanted possessions and you're unsure whether you need to register with HMRC, I can help you establish your tax position and make sure you report the right figures.