Does HMRC Track Your eBay Sales? A Guide for Pokémon Card Sellers

As a Pokémon seller doing business on eBay, you might wonder whether HMRC can see your sales and if you need to pay tax on the money you make. The right answer depends on more than how much you sell. 

Online platforms can report seller information to HMRC, but that does not mean you owe tax. Regularly buying cards to sell them for profit is different from selling cards you have collected over the years. 

This guide will tell you everything you need to know about HMRC reporting rules, the Trading Allowance, and the tax treatment of personal collections as a Pokémon card seller. 

Does HMRC Track eBay Sales?

The UK digital reporting rules have applied since 1 January 2024. Platforms such as eBay may now be required to collect information about sellers and report it to HMRC. These platforms generally collect this information annually and send it to HMRC by the following January. They are also required to share a copy of that reported information with the sellers. HMRC can use these details alongside tax returns and other records to check if the income has been reported correctly. 

Although, being reported to HMRC does not automatically translate into you owing tax. The reporting rules are just about sharing information, not introducing the application of a new tax on eBay sales. 

For example, if you make a sale from your childhood collection of the cards, and eBay reports your sales, it does not mean that those sales are now taxable. Your tax position is dependent on whether you are trading, making a Capital Gain, or simply disposing of personal possessions.  

When Does eBay Report Your Sales to HMRC?

If you are making less than 30 sales in a calendar year and receive less than €2,000 which is approximately £1,700 from those sales, you are an exception to the reporting rule. If you do not meet both those conditions, eBay may be required to report your information to HMRC. For instance, making 35 sales of individual Pokémon cards could bring you within the reporting requirements, even if the total earned amount is relatively small. 

The bottomline is that these figures determine where the reporting exception applies. They are not tax-free allowances. You should not assume that staying below the threshold means you never need to declare income.

Your reporting position and your tax position are separate questions. eBay’s obligations concern the information it shares, while your tax obligations depend on the nature of your sales and the applicable tax rules.

Do You Have to Pay Tax When Selling Pokémon Cards on eBay?

One may ask, “Do I have to pay tax when selling my Pokémon cards on eBay?”. HMRC’s guidance mainly focuses on what exactly you are doing with the cards instead of simply counting your transactions. 

Here are four common situations that you must consider: 

• Selling unwanted cards: You sell cards that you have collected years ago because you no longer want them. 
• Selling duplicates: You occasionally sell spare cards from your personal collection. 
• Buying undervalued cards: You purchase cards because you believe you can sell them for more than you paid. This may indicate trading, depending on the wider circumstances.
• Running a resale side business: You regularly purchase collections, list individual cards and reinvest the proceeds in more stock. This is more consistent with a trading activity.

HMRC identifies your actions as trading if you purchase or make goods with the intention of selling them for a profit. Therefore, if your activity amounts to trading, you are required to report your Trading Income and pay Income Tax on your taxable profits. 

But if you sell personal possessions, Capital Gains tax may be paid on certain gains instead. The difference matters as the same Pokémon card can be sold in completely different circumstances, and the tax treatment can differ accordingly. 

Selling Your Personal Pokémon Collection vs Trading

The best way to understand the difference is to consider why you acquired the cards and how you sell them. 

The two ways you are selling are as follows: 

Selling a personal collection

For example, let’s assume you have collected Pokémon cards as a child and have kept them for years. Now as an adult you decide to sell them because you have lost your interest in collecting, want to reduce some of the collection, or simply have duplicates you no longer wish to keep. These circumstances point towards disposing of personal possessions rather than trading. You acquired the cards for the sake of your enjoyment, not as a stock that you can sell later. 

Trading Pokémon cards

Imagine you regularly purchase collections to separate and then resell individual cards. You might purchase high-value graded cards with the intention to sell them at a premium rate, or maintain an eBay shop with a steady supply of inventory. That activity is more likely to fall in the category of trading because the purchases and sales form part of an organised effort to make money. 

HMRC considers a number of factors when determining whether an activity is a trade, including the intention behind a purchase, repeat transactions, the type of items, and how the activity is organised. Therefore, a single factor can not automatically determine the answer. 

What Is the £1,000 Trading Allowance?

Trading Allowance can be useful if you make money from reselling Pokémon cards with other activities. It covers up to £1,000 of gross trading income per tax year. Please note: Gross Income means the amount received before deducting expenses, not the profit left after paying the ebay fees and purchasing stock. 

For example, if you receive £800 from Pokémon card resale, and £500 from another trading activity, your total gross trading income is £1,300. Since this exceeds £1,000, you are required to inform HMRC regarding the income. If your total Gross Trading Income is £1,000 or less, there may not be a need to declare it. You can use the Trading Allowance instead of deducting business expenses. But, you are not eligible to claim both against the same income. 

Please remember that the Trading Allowance is separate from eBay’s reporting thresholds. While one concerns your tax obligations, the other determines if the platform must report your information. 

What If You Make a Large Profit on a Rare Pokémon Card?

Let’s imagine you purchased a rare Pokémon card ages ago for your personal collection. Now its value has increased significantly and you decide to sell it. A substantial profit does not automatically translate into meaning that you were trading. But, selling a personal possession for a high price does not make the gain tax-free either. 

HMRC’s Capital Gains Tax rules, known as chattels, can apply to personal possessions. You may need to consider Capital Gains Tax if you sell an individual possession for £6,000 or more. For instance, selling a high-value rare card alone may need to be assessed differently compared to selling a set of cards together. The purchase price, sale proceeds and the reason for the disposal all matter when calculating any gain. 

The £6,000 threshold is connected to the proceeds of the disposal, not simply the profit earned. Other rules may impact the amount of any taxable gain. If you are planning to sell a high-value card or collection, it is worth getting advice from a professional before assuming no tax is due. 

What Expenses Can Pokémon Card Sellers Claim?

If you are trading, allowable business expenses can be deducted when calculating your taxable profit. 

• For a Pokémon card reseller, these may include:
• Cost of cards purchased for resale
• eBay selling fees 
• Payment processing fees
• Postage and shipping 
• Protective packaging
• Top loaders, sleeves and card holders used for sales
• Professional grading fees where relevant to the business 
• Business-related software or subscriptions
• Accountancy fees

The key is that the expense must meet the rules defined by HMRC and relate to the business. Costs incurred for personal collection can not automatically be treated as a business expense. 

For example, if you purchase booster packs for your own enjoyment and collection but later sell a few cards, you can not classify the entire purchase as a business expense without taking the circumstances into consideration. If you utilize the £1,000 Trading Allowance, you can not also deduct actual income against the same income. Compare the two situations to understand what is more appropriate for your circumstances. 

What Records Should eBay Pokémon Card Sellers Keep?

If you purchase and sell cards on a regular basis, you must keep records that show where the money came from and what you spent to earn that money. 

Some important records include: 

• Purchase price of cards
• Sale price 
• eBay statements
• eBay fees 
• Postage and packaging
• Grading costs
• Receipts
• Bank or PayPal transactions 
• Dates of purchases and sales 
• Inventory records where appropriate 

It is also beneficial to differentiate cards kept for personal collection from stock bought for resale. This can make it easier to explain the type of your transactions if you need to review your tax position. 

What Happens If eBay Reports You to HMRC?

If you are reported to HMRC by eBay, you do not need to assume you have done something wrong. Check the nature of your sales. If you are selling your personal collection, maintain records that support this. Or if you are trading and are selling your stock, review your total Gross Trading Income and determine whether you are required to declare it. 

If you find that income should have been reported but was not, you are required to correct your tax position with HMRC. The key is to establish what the sales represent rather than depending on the total in eBay’s report. The report shows information about your activity on the platform. It does not determine whether you own Income Tax or Capital Gains Tax. 

When Should a Pokémon Card Seller Speak to an Accountant?

When selling activity becomes more than an occasional clear out, it is best to get professional advice. You should consider speaking to an accountant if you regularly purchase cards to sell, earn a growing side income, sell across several marketplaces or are unsure whether your activity qualifies as trading. 

Professional advice can also help if you have different personal cards with resale stock or are planning to sell a rare card or collection for a big amount. 

An accountant can help you understand whether Income Tax or Capital Gains Tax may apply, figure out which records you need and help you establish whether you have any reporting obligations. Getting clarity at the right moment can help you manage your tax affairs correctly instead of waiting until a problem or question arises. If you are unsure about your position, getting advice can help you deal with it confidently.

Selling Pokémon cards regularly or unsure what needs to be reported to HMRC? Speak to Heighten Accountants. We can help you understand your tax position, keep the right records and make sure your eBay income is handled correctly.