If you merely sell a personal item once or very occasionally on eBay that is unlikely to be viewed by the tax authorities as “trading” on eBay. However, if you are more prolific in terms of selling on websites like eBay then the result could be different. Here are some yardsticks set out by HMRC of the UK as what might constitute “trading” as a eBay, Amazon etc seller.
The badges or indicators of trading
| Indicators of Trading | Points to Consider |
|---|---|
| 1. Profit-seeking motive | An intention to make a profit supports trading |
| 2. The number of transactions involved | Systematic and repeated transactions support trade |
| 3. The nature of the goods sold | Are the goods only capable of being turned to advantage by being sold? Or do they yield income, or give enjoyment through pride of ownership? |
| 4. Existence of similar trading transactions | Was this a one-off transaction or part of a pattern that suggests trading? |
| 5. Changes to the goods | Were the goods repaired, modified or improved to sell them more easily? |
| 6. The way the sale was carried out | Were the goods sold in a way that indicates trading, or to raise cash in an emergency? |
| 7. The source of finance | Was money borrowed to buy the goods? Were any profits to be used to repay the loan? |
| 8. Interval of time between purchase and sale | Goods being traded are usually bought then sold quickly |
| 9. Method of acquisition of the goods | Goods acquired by an inheritance, or as a gift, are less likely to be the subject of trade |