Plenty of headlines have talked about a "side hustle tax". There isn't a new tax, but online platforms now share sellers' details with HMRC, so it helps to understand where you stand. This guide is general information, not tax advice; check GOV.UK or an accountant for your situation.
Platforms report to HMRC
Since 1 January 2024, online marketplaces must report sellers to HMRC once they make 30 or more sales in a calendar year, or receive about £1,700 (the limit is set at €2,000, so the sterling figure moves) or more. Being reported doesn't mean you owe tax. It means HMRC can see the activity.
Selling your own things vs trading
Selling your own unwanted belongings for less than you paid is generally not trading, and usually isn't taxed as income. Buying items in order to resell them at a profit is different: that can be trading, and profits from trading can be taxable.
The £1,000 trading allowance
If your total trading income (before expenses) in a tax year is £1,000 or less, the trading allowance generally means you don't need to tell HMRC about it or pay tax on it. Above that, you may need to register for Self Assessment and report your profit.
Costs you can take off
If you're trading, tax is worked out on profit, not on sales. Costs that are for the business, such as the stock you buy, platform fees, postage, packaging and some travel, generally reduce your profit. You can usually choose either to deduct your actual costs or to use the £1,000 trading allowance instead, but not both, so it's worth working out which is better.
Keep simple records from day one
- What you bought, where, when and for how much.
- What you sold, when and for how much.
- Fees, postage, packaging and other costs.
A spreadsheet is enough to start. Good records make it easy to work out your profit and to show your figures if HMRC ever asks.
Where to check
Search GOV.UK for "selling online and paying tax" and "trading allowance" for the current official guidance.