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You clear out a wardrobe on Vinted. A few weeks later, the app sends you an email saying it has shared your details with HMRC. For most people, that email causes more worry than it should. Side hustle tax rules did not change when the platforms started reporting. What changed is how much HMRC can see. So it all comes down to one question: are you selling your own old things, or are you running a small business?
This guide explains how HMRC tells the difference, what the platforms actually report, and what to do if you need to register.
Do you pay side hustle tax on things you sell online?
It depends on why you sell. Side hustle tax only applies to trading. HMRC splits online sellers into two groups, and the tax rules for each look very different.
Selling your own personal items
If you sell things you bought for yourself, such as clothes, toys or old furniture, you are not trading. You normally sell these items for less than you paid, so you make no profit. As a result, you owe no Income Tax on that money. GOV.UK says it plainly. You are unlikely to pay tax if you sell personal items from your home.
There is one exception. If you sell a single possession for £6,000 or more at a profit, Capital Gains Tax may apply. This mostly affects jewellery, paintings, antiques and collectables. Your car is exempt, and so are most items with a short working life.
Buying or making items to sell
The picture changes once you buy stock to resell, or make items to sell for profit. HMRC calls this trading, and trading income is taxable.
HMRC looks at a set of signs, often called the badges of trade. For example, it asks:
- Did you buy the item with the plan of selling it on?
- Do you sell the same kind of item again and again?
- Did you repair, improve or repackage it to get a better price?
- Does the activity look like a business, with stock, branding or regular listings?
Nobody applies these tests like a tick box. Instead, HMRC weighs up the whole picture. Still, if you buy vintage jackets at car boot sales to flip on eBay, you are almost certainly trading.
A wardrobe clear-out versus a reseller
Amira sells 45 items of her own clothing on Vinted in 2026 and receives £1,900. She passes both platform reporting thresholds, so Vinted will report her to HMRC. However, she sold her own used clothes at a loss. She owes no tax, and she has nothing to register.
Jake buys trainers at clearance prices and resells them on eBay. He makes 25 sales and takes £2,400. He stays under the 30 sales limit, but he passes the money limit, so eBay reports him too. Unlike Amira, Jake is trading. His income is over £1,000, so he must register for Self Assessment and pay tax on his profit.
Both sellers appear in the same HMRC report. Only one of them owes tax.
- Reported to HMRC
- Yes
- Tax due
- No
- Reported to HMRC
- Yes
- Tax due
- Yes
The £1,000 trading allowance
The trading allowance lets you earn up to £1,000 a year from trading without paying tax on it. It covers online selling, casual jobs and other small side hustles. Three details catch people out:
- The limit applies to gross income, not profit. HMRC counts what customers paid you before fees, postage and stock costs.
- The limit covers all your trading income together. Sales on Etsy, eBay and a weekend market stall all add up to one total.
- You choose between the allowance and your real expenses. If your costs run higher than £1,000, you will usually pay less tax by claiming the actual expenses instead.
If your gross trading income stays at £1,000 or less, you normally don’t need to tell HMRC at all. Once it goes over £1,000, you need to register. We cover the finer points in our guide to what the trading allowance is and how to claim it.
Is the side hustle tax limit changing to £3,000?
You may have seen headlines about a new £3,000 limit. In March 2025, the government said it would raise the threshold for filing a Self Assessment return on trading and property income to £3,000. It expects the change to take effect before the end of this Parliament, so by 2029 at the latest.
This change does not create a bigger tax free allowance. The £1,000 trading allowance stays the same. Instead, people with side income between £1,000 and £3,000 will report and pay through a simpler online service rather than a full tax return. Until HMRC launches that service, the current rules apply.
Which platforms report to HMRC and when?
Platform reporting did not create a new side hustle tax. Since 1 January 2024, UK platforms have had to collect seller details and send them to HMRC once a year. These rules come from an international framework set up by the OECD, and other countries run the same system.
The reports cover marketplaces such as eBay, Vinted, Etsy, Depop and Amazon. They also cover service platforms, for example Airbnb, food delivery apps and freelance sites.
The reporting thresholds
For sales of goods, a platform reports you if, in one calendar year, you:
- Make 30 or more sales, or
- receive €2,000 or more, which GOV.UK puts at about £1,700.
You only need to cross one of these lines. The euro figure also means the sterling amount moves slightly each year with the exchange rate.
These thresholds apply to goods only. For services like short term lets or delivery work, platforms report sellers regardless of how much they earn.
What the platforms tell HMRC
For an individual seller, the report includes your full name, home address, date of birth and National Insurance number or other tax ID. It also shows how much you received through the platform. Platforms collect data from 1 January to 31 December and send it to HMRC by the following 31 January. Afterwards, they send you a copy of what they reported.
Keep in mind that a report is not a tax bill. It simply gives HMRC data to check against what people declare.
What HMRC does with the data
HMRC matches platform reports against its own records. If someone shows regular sales income but has never registered for Self Assessment, that gap stands out.
In that case, HMRC may write to you. Often these letters, known as nudge letters, ask you to check your position and correct it yourself. If you receive one, take it seriously. Ignoring a nudge letter can turn a simple fix into a formal enquiry.
A calm reply works best when you have records. For instance, if you only sold personal items, keep a rough list of what you sold and what you originally paid. That evidence usually settles the matter. For a wider view of how these letters work, read our guide to HMRC nudge letters for rental income, which follows the same approach. Airbnb hosts face the same data sharing, and our post on why Airbnb shares data with HMRC explains that side.
How to register and pay side hustle tax
If you trade and your gross income tops £1,000, follow these steps.
Step 1: Check whether you need to tell HMRC
HMRC runs a free tool to check if you need to tell HMRC about additional income. It takes a few minutes and gives you a clear answer.
Step 2: Register for Self Assessment
You must register for Self Assessment by 5 October after the end of the tax year in which you started trading. So if you started selling in the 2025/26 tax year, the deadline is 5 October 2026. If you have missed it, register now. HMRC treats people who come forward on their own far more kindly than people it has to find. Our step by step guide on how to register as self employed walks you through the forms.
Step 3: Keep simple records
Record every sale, fee and cost. A spreadsheet works fine for a small side hustle. Next, keep receipts for stock, packaging and postage. You will need these figures if you claim allowable business expenses instead of the trading allowance.
Step 4: File your return and pay on time
You file your online return and pay any tax due by 31 January after the tax year ends. Your profit counts as income, so you pay Income Tax at your normal rate. If your trading profits pass £12,570, you also pay Class 4 National Insurance on the amount above that.
If you use an AI tool to help with your figures, check every rate and threshold against GOV.UK first. Our guide on whether you can trust ChatGPT with your tax return explains where AI most often gets UK tax wrong.
Christmas selling and one off income
The weeks before Christmas bring a rush of sellers making gifts, crafts and seasonal stock. The same side hustle tax rules apply here. If you make candles to sell at Christmas, that is trading, even if you only do it once a year. Meanwhile, selling unwanted presents in January is not.
What happens if you don't declare trading income?
If you should have registered but did not, HMRC can charge a penalty for failing to notify. It works out the penalty as a percentage of the tax you owe. The rate depends on whether HMRC sees the mistake as careless or deliberate, and it can reach 100% of the tax in the worst cases. HMRC also adds interest on late tax.
The good news is that telling HMRC first usually brings the penalty down, sometimes to nothing. Therefore, if you know you have undeclared income, act before HMRC contacts you.
When to get help from an accountant
Many small sellers can handle side hustle tax alone. However, it gets harder when you sell across several platforms, buy stock in bulk, or suspect you owe tax for more than one year. At that point, a short review can save you money and stress.
Our team works with online sellers every day, from part time resellers to full ecommerce businesses. If eBay is your main channel, see our eBay accountants page. Not sure if you need to declare anything at all?
Frequently asked questions
Can I earn £1,000 tax free from my side hustle?
Yes. The trading allowance lets you earn up to £1,000 of gross trading income each tax year without paying tax or telling HMRC. The limit covers all your trading income combined, not each platform separately.
Will HMRC find out about my side hustle?
Very likely, if you sell through a platform. Marketplaces report sellers who make 30 or more sales or receive about £1,700 in a calendar year. HMRC then compares that data with what people declare.
Do I have to pay tax if Vinted reports me to HMRC?
Not necessarily. A report only shows HMRC how much you received. If you sold your own used items for less than you paid, you owe no Income Tax, even when Vinted shares your details.
How much can I sell on eBay before paying tax?
Traders pay tax once their gross trading income passes £1,000 in a tax year. Selling personal belongings usually costs you nothing, whatever the total. Separately, eBay reports you once you hit 30 sales or about £1,700.
Is the side hustle tax limit going up to £3,000?
Not in the way most headlines suggest. The government plans to raise the threshold for filing a full tax return to £3,000 by 2029. However, the tax free trading allowance stays at £1,000. People earning between £1,000 and £3,000 will still owe tax, but they will use a simpler online service to pay it.
What if I have already missed the registration deadline?
Register for Self Assessment as soon as you can. Coming forward before HMRC contacts you usually leads to a lower penalty, and in many cases no penalty at all
This guide gives general information, not personal advice. Your own situation can change how these rules apply to you. If you are unsure, speak to our team before you file.
Muhammad Sufyan Moavia
Muhammad Sufyan Moavia, Chartered Tax Adviser and Fellow Chartered Certified Accountant at IBISS & CO.
He has 15 years experience in accounting and tax, advising individuals and business owners on personal tax, HMRC matters, IHT, CGT and tax planning.
Last review: September 2026
