Online sales taxes UK

When you work for yourself by selling stuff online what taxes have to be paid on your earnings? Online sales taxes in the UK is a complicated thing so we’ll take you through it stage by stage.

Who’s included

Understanding who should pay tax and who doesn’t need to is the first thing you need to understand. Sole traders and partnerships are classified as “self-employed” so they’re subject to taxation from HM Revenue and Customs (HMRC). Stuff they sell online has to be declared but that’s not the case for individuals. If you’re only selling a few unwanted items via eBay or something similar, you don’t need to worry about paying tax on the earnings.


To establish if you’re trading or simply selling a few odds and ends, HMRC have provided the following definition. You’re trading if you regularly make profit from what you sell. You’re also trading is you make or modify a product for sale. Selling online or through a car boot sale on a regular basis makes you a trader.

Sole trader

If the above classification covers what you do to earn cash, you’ll need to register as a sole trader. You can do this online through gov.uk/set-up-sole-trader/register. This is the easiest way of getting yourself into the system. You’ll need to keep records of your income and outgoings and then you’ll need to pay your taxes on two occasions each year (normally January 31 and July 31). You’ll find a HMRC calculator at gov.uk if you’re unsure how much needs paying.


You only need to register for VAT if your firm is turning over more than £82,000 per annum. If you want to do this, head to gov.uk/vat-registration and follow the simple to understand process.

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