HMRC rolls out ‘side hustle tax’ for online sellers on eBay, Vinted and more

Dgital platforms such as eBay, Airbnb, Etsy, Amazon and Vinted must now share seller information with HMRC

People making a “side hustle” from selling second-hand clothes online or homeowners renting out a spare room on Airbnb are among those who could end up paying tax on their earnings under a New Year tax clampdown.

From 1 January firms including Vinted, Airbnb, Depop and eBay are obliged to collect and share details of transactions with the tax authorities.

While HMRC was already able to request information from UK-based online operators, from the start of 2024 there are new rules that the UK has signed up to via the international body, the Organisation for Economic Cooperation and Development (OECD), as part of a global effort to clamp down on tax dodgers.

Under the new rules, digital platforms will routinely report the income sellers are getting through their site and will apply to sales of goods, such as second-hand clothes or handmade items, but also services including taxi hire, food delivery and short-term accommodation lets.

The threshold for earnings from so-called online side hustles is set at more than £1,000 a year – above this, online sellers must register as self-employed and file a self-assessment tax return at the end of the financial year.

HMRC said in a statement: "These new rules will support our work to help online sellers get their tax right first time. They will also help us detect any deliberate non-compliance, ensuring a level playing field for all taxpayers."

It is advised that people earning below the £1,000 threshold may not have to fill in a tax return, but should keep records in case they are asked for them.

Online platforms will be required to report seller information directly to HMRC – although not until the end of January 2025.

In the UK, individuals have a £1,000 tax-free allowance for money make through propery or a ‘trading income’ (Getty Images/iStockphoto)

Adam Jay, chief executive of the second hand marketplace platform Vinted, told the BBC that the rules would not affect many of the site’s sellers.

"It’s actually quite a small proportion of users of our platform who will trigger this threshold where we need to provide information," he said.

"It’s only those people who are making a profit from selling second hand items that might be eligible for tax and then it’s about their own personal tax situation what tax would ultimately be due to HMRC," he said.

"We’ll be actively reaching out to those sellers explaining what the new requirements are why they exist."

Meanwhile, social media users have been criticising the announcement, branding it an “unfair” rule considering that some Depop and Vinted sellers on low incomes rely on using the digital platforms to make extra cash.

One Twitter/X user wrote: “The folk I know who use Depop are all students selling second hand clothes they got from charity shops trying to get enough money to eat. Ludicrous

“Tax the billionaires and not the people unable to survive just on their salary alone and who are being forced to sell their belongings to scrape together some extra cash during a cost of living crisis,” another added.

Another user remarked that re-selling more expensive items, like second hand camera equipment, could lead them to be taxed on something they already paid VAT on when they initially bought the item.

One disappointed user wrote that HMRC “are not at all bothered about tax dodgers” but “have all the strength for ordinary people who resell items on Vinted/eBay/Depop/etc — despite the fact that we’ve already paid tax (VAT) on said items”.

Emma Rawson, tax expert at the Association of Taxation Technicians, told the BBC’s Today programme that anyone who thinks they could be earning above the minimum £1,000 trading allowance should contact the tax authorities.

“Don’t wait for that letter to come through, or for HMRC to contact you,” she said. “It’s always better if you think there may be tax for you to pay to declare that upfront as there may be penalties involved if not.”

The Independent has contacted HMRC for comment.