Trading Allowance for selling second hand and handmade

Picture this: It’s the beginning of the new year, and you’ve decided to finally declutter your wardrobe by selling some pre-loved pieces on platforms like Depop, Vinted, and eBay.

Or, you may be dabbling in content creation or influencing through social media, or other streaming channels.

Suddenly, you catch wind of HMRC’s ‘side hustle’ rules all over your news feed.

But… don’t panic.

We’re here to reassure you and break down how this will (and won’t) affect you.

Firstly, do you earn over £1,000 per tax year by using platforms such as Vinted, Etsy, Depop, eBay, Amazon, or Uber Eats?

If the answer is ‘no’, then there is nothing you need to worry about.

These new disclosure rules will also affect content creators and influencers earning income through social media and streaming channels. So, if this is you, keep reading!

In the UK, individuals can earn up to £1,000 per year from a hobby (or ‘side hustle’) before they need to register as self-employed with HMRC and fill in a self-assessment tax return.

There are actually no new rules for online sellers when it comes to HMRC, this £1,000 Trading Allowance has been in place for a while, there is just a change in the way that it’s reported via these digital platforms.

From January 2025, HMRC will be collecting data from these sites directly. It will be mandatory for the operators of the online platforms to report all sales by individuals to the tax authorities.

If you do, or you’re planning to, earn over £1,000 this year by selling on these platforms, here’s what you need to do:

1. Check to see if you need to be a registered trader with Vinted, Etsy, eBay, etc.
2. Keep a record of your income from these platforms, monitoring your total earnings (usually you can see this figure within the platform itself).
3. Register as Self-Employed with HMRC (they will send you a Unique Taxpayer Reference (UTR), a 10-digit number that identifies you for tax purposes).
4. Complete a self-assessment tax return each year, reporting your total income, including earnings from selling online.
5. Pay any income tax owed on your total earnings (the amount will depend on your total income and applicable tax rates).

Steps 3, 4, and 5 are where it can become a little more complex, so seeking the help of an accountant or bookkeeper (like us!) is always a good idea. We can help guide you through and ensure you’re doing all the right things, so you don’t end up with a surprise HMRC tax bill on your doormat!

HMRC have created a tool to help those of your running side hustles, that works out if you are liable for income tax on your additional earnings.

We have popped a link below. Click to check if there is any action you need to take.

Check if you need to tell HMRC about your income from online platforms – GOV.UK

If you have any questions, feel free to pop them in the comments of our latest post, message us, or email us contact@whyfield.co.uk

Again, if you are planning on selling a few of your old jumpers or dresses on Vinted, this does not apply to you! This ONLY applies to those that have, or are planning to, sell over £1,000 per year on these sites.

Happy selling!