You would be expected to pay tax if you’re selling items with the intention of making profit on them – this means you’re classed as trading
HMRC has issued an urgent warning for anyone urging more than £1,000 in extra income. You can earn up to £1,000 through a side hustle every tax year, without having to pay tax.
This is called your trading allowance. If you make above this amount, you may need to declare this to HMRC through self-assessment.
You would be expected to pay tax if you’re selling items with the intention of making profit on them – this means you’re classed as trading – and you make more than £1,000 in one tax year.
But you wouldn’t be expected to pay tax if you’re just selling unwanted items from your home. Online platforms such as eBay and Vinted must now share their sales data with HMRC for tax purposes if they sell at least 30 items or earn €2,000 (roughly £1,700).
Previously, HMRC had to request this information. But again, this does not definitely mean you owe tax – you’d only have to pay tax if you’re considered to be trading.
Under current rules, you need to fill a self-assessment tax form when you earn over £1,000 in extra income per tax year – but this is being raised to £3,000.
If you make under £3,000, there will be a new and simple online form that you’ll need to fill in to declare your earnings instead. This will come into force by 2029. The amount of tax you need to pay won’t change – only the way you report your earnings to HMRC.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “Whether you are selling handmade crafts online, creating digital content, or renting out property, understanding your tax obligations is essential.
“If you earn more than £1,000 from these activities, you may need to complete a Self Assessment tax return. Filing early puts you in control – you will know exactly what you owe, can plan your payments, and avoid the stress of the January rush. You don’t need to pay immediately when you file – you have until 31 January to settle your tax bill.”
There are many other reasons why you may need to fill out a self-assessment form, which include:
- Your income from renting out property was more than £2,500
- You earned more than £2,500 in untaxed income, for example from tips or commission
- Your income from savings or investments was £10,000 or more before tax
- You need to pay Capital Gains Tax on profits from selling things like shares or a second home
- You’re a director of a company (unless it was a non-profit organisation)
- Your income, or that of your partner, was over £60,000 and you’re claiming Child Benefit
- You have income from abroad you need to pay tax on
- Your taxable income was over £100,000
- You’re a trustee of a trust or registered pension scheme
- Your state pension was more than your personal allowance, and your only source of income
