Introduction
If you sell on platforms like eBay, Vinted, Etsy, or Depop in the UK, 2024 brought some significant tax changes you need to know about. New HMRC reporting rules came into force on January 1st, 2024, aimed at ensuring online sellers declare their income correctly. Whether you’re running a side hustle or just clearing out old clothes, it’s vital to understand how these rules affect you — or you could face fines, backdated tax, or worse.
Let’s break down what’s changed, who it impacts, and how to stay compliant.
What Are the New HMRC Rules for Online Sellers in 2024?
From January 1st, 2024, digital platforms like eBay, Vinted, Etsy, Depop, and others are legally required to collect and report seller data to HMRC. This is part of the UK’s adoption of the OECD’s “Model Rules for Reporting by Platform Operators.”
Platforms must report the following about sellers:
- Full name
- Address
- Date of birth
- National Insurance number or Taxpayer Identification Number (TIN)
- Sales volume and total income
- Fees and commissions charged
- Business registration numbers (if applicable)
This information must be submitted to HMRC annually, with the first report due by January 31st, 2025, covering the period January 1 to December 31, 2024.
Do You Need to Pay Tax on Online Sales?
Whether or not you need to pay tax depends on how much you earn and how frequently you sell.
📈 If You Sell Regularly (You Might Be ‘Trading’)
If you’re consistently selling with the intention to make a profit, you’re likely considered to be “trading” under HMRC rules. This includes activities like:
- Reselling for profit
- Handmade goods or crafts
- Dropshipping or stock buying
If your total sales exceed £1,000 in a tax year, you must:
- Register for Self Assessment
- Keep clear records of sales and expenses
- Pay income tax and National Insurance contributions
🚨 If You Sell Occasionally (You Might Be Exempt)
You might qualify for the occasional seller exclusion if:
- You made fewer than 30 transactions in a year
- Your total income from platforms was less than €2,000 (approx. £1,700)
Even if you fall under this threshold, it’s wise to keep records in case of future audits or rule changes.
🧹 If You’re Just Decluttering
If you’re selling personal items you originally bought for private use (e.g. second-hand clothes, books, electronics), you’re not considered to be trading.
Example: Selling your old PlayStation or a wardrobe full of clothes is unlikely to be taxable.
However, if you’re buying items specifically to sell them, or doing this frequently, HMRC may still consider it a business.
HMRC Thresholds: Then vs. Now
🔄 Original Thresholds (Effective Jan 1, 2024):
- Reporting required for sellers making 30+ sales or earning over €2,000 (£1,700) annually
- Trading allowance: £1,000/year — income below this did not require registration
🔹 New Updates (As of March 2025):
- The UK government proposed increasing the trading allowance to £3,000 to reduce admin for side hustlers
- However, tax is still due on income over £1,000
- Implementation is expected during the current Parliament, but not yet law as of March 2025
Warning: There Is Nowhere to Hide
If you’re not declaring your online earnings and think you can fly under the radar, it’s time for a serious reality check.
With new HMRC powers, digital platforms reporting your earnings, and the Department for Work and Pensions (DWP) being granted enhanced access to your bank account if you’re on benefits, the digital surveillance net is tightening fast. This isn’t scare-mongering — it’s the new reality.
If you’re “on the fiddle” — selling online without declaring it, especially while claiming benefits — the risk of being caught is now higher than ever. HMRC and DWP are actively cross-referencing data from platforms, tax records, and banks. In the era of digital footprints and AI-driven monitoring, there is nowhere to hide.
🔗 Learn more: DWP’s New Powers Explained
🔗 Full breakdown: DWP & HMRC Digital Oversight
Don’t assume you’re safe because you’ve stayed under the radar so far. The system is designed to catch up with you, and once it does, the consequences can be devastating — from benefit fraud investigations to hefty tax bills or even prosecution.
Declare. Stay compliant. Protect yourself.
🧾 The Importance of Tracking & Accurate Record-Keeping
Whether you’re casually clearing out your wardrobe or running a side hustle, keeping detailed records is essential. With HMRC tightening its oversight and platforms reporting your activity directly, you need to be able to clearly differentiate between personal items and items sold for profit.
Here’s why tracking matters:
✅ Selling Household Items? Keep These Details:
Even if you’re only selling your own belongings, record:
- What was sold
- When you originally bought it
- How long you owned it before selling
This helps prove the items were for personal use and not bought to resell — a crucial distinction for HMRC.
🔄 Selling a Mix of Personal and Resale Stock?
If you’re doing both — for example, selling your old clothes and buying items to flip:
- Track each item’s source
- Log purchase costs, dates, and resale values
- Compare profits from resale vs. personal items
This not only helps determine if you cross the £1,000 trading allowance, but also provides a strong defense if HMRC audits your activity.
🛡️ Should you face an inspection, being able to clearly show what is personal stock vs. working stock will protect you from misclassification, penalties, and potential backdated tax.
🧮 Tools to Help:
- Spreadsheets like Excel or Google Sheets
- Accounting software like QuickBooks, FreeAgent, or even seller-specific tools like Notion templates
- Keep receipts, invoices, and photos of items for added clarity
What Happens If You Don’t Comply?
If you fail to report your income or give incorrect information, consequences can include:
- Fines and penalties
- Backdated tax owed with interest
- Potential criminal investigation for fraud in extreme cases
Platforms themselves can also be penalised for failing to report data accurately to HMRC.
How to Stay Compliant: A Quick Checklist
- Track Your Sales: Use spreadsheets, apps, or platform tools
- Know Your Threshold: £1,000 is the current limit before you must register
- Register with HMRC: If you exceed the trading allowance
- File Your Tax Return: Submit via Self Assessment by Jan 31 each year
- Keep Receipts & Invoices: Especially if you’re deducting expenses
- Get Advice: Speak to an accountant if unsure
FAQs About Selling Online and Paying Tax
Do I have to pay tax on eBay or Vinted sales in the UK?
If your annual income from these platforms is over £1,000 or you sell frequently for profit, then yes.
How much can I earn online before declaring tax?
£1,000 annually under the trading allowance. This may increase to £3,000 in the future.
Can HMRC see my PayPal or Vinted activity?
Yes. Platforms now report this data directly to HMRC.
What if I only sell once or twice a year?
Occasional sales under 30 transactions and €2,000 (£1,700) total may be excluded from reporting.
Do I need to register a business?
Only if you’re trading. Selling personal used items usually doesn’t require registration.
Key Takeaways
- New HMRC rules require platforms to report seller info from 2024
- You may owe tax if you earn over £1,000/year from online sales
- Trading allowance may rise to £3,000, but tax is still due above £1,000
- Occasional, personal sales are typically tax-free
- Stay organised and file if required to avoid penalties
Useful Resources
- 🔗 Check if you need to tell HMRC about extra income
- 🔗 Register for Self Assessment
- 🔗 Trading and Miscellaneous Income Allowance
- 🔗 OECD Reporting Rules Overview
