There’s some confusion about when you need to pay tax on your side hustle — I separate fact from fiction with the rules
If you sell your old clothes on Vinted or eBay, rent out your driveway or a spare room, or get paid for dog walking or cat sitting, you might be a little spooked by your chosen providers reporting your earnings to HMRC, which has been happening since the start of January 2024.
As of April 2027, the trading allowance is tripling, meaning that instead of the current £1,000 earnings allowance for a side-hustle without paying tax, you’ll be able to earn up to £3,000 instead.
Is this something you need to worry about? We’ve divided fact from fiction when it comes to earning money with digital platforms.
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What’s changing in 2027?
The Autumn Budget came with great news for those with side hustles — from April 2027, the trading allowance is being trebled from £1,000 to £3,000. This means that you can now earn three times as much from your side hustle without having to file a tax return.
As before, the £3,000 is calculated with your earnings, not your profit — so you might have expenses that bring you below £3,000, but you’ll still need to file a return if you’ve earned more than £3,000 over the tax year.
The change won’t come until the 2027-2028 tax year, so if you’re earning more than £1,000 in the 2026-2027 tax year (or if you’re yet to do a return for the 2025-2026), you’ll still need to file a return.
Fiction: The government have started to tax Vinted and eBay sellers
When the rules on data reporting changed in 2024, Vinted and eBay sellers became confused, thinking there was a brand-new “side hustle tax”. The important fact to stress is that there isn’t any kind of “new” tax on side hustles. The rules currently mean that you can earn up to £1,000 in a side hustle tax-free without having to let HMRC know, thanks to a “trading allowance”. In April 2027, this is being raised to £3,000.
Once you earn more than £1,000 in a tax year (£3,000 from April 2027), you need to let HMRC know and file a self-assessment tax return. You might not have to pay tax if your expenses, including platform fees, mean that your profit remains under £1,000.
Fact: There are new rules for reporting data
As of 31 January 2025, digital platforms that allow people to make a little extra money on the side are required to report information to HMRC. A lot of these platforms started doing this in 2024.
Previously, HMRC could ask for this information from UK-based apps when it needed it. It’s now signed up for something called the Organisation for Economic Co-operation and Development (OECD) rules, which allows it to get the data from overseas-based companies and automates the process.
This is designed to clamp down on tax-dodgers, those earning a great deal of money in profit without paying tax. It’s not intended to force you to pay tax when you sell unwanted clothes in your wardrobe. A lot of users of these sites think that there was a new tax on side hustles announced.
Because HMRC will have more information on what you could be earning, you’ll need to make sure you know the rules and that you’re on top of any tax you might need to pay. Otherwise, you could be in for a nasty shock down the line.
What are classed as digital platforms?
In this case, a digital platform is an app or website that connects you to buyers of your items or services, allowing you to make money – this includes Vinted, Amazon, Etsy, eBay, Uber and Airbnb.
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Fiction: Your data is going to be automatically reported to HMRC
Not necessarily. There’s a €2,000 or 30-item threshold for selling items online. If you sell less than this, HMRC won’t be notified. It’s not clear yet whether this limit will change as a result of the new trading allowance.
If you provide a service, like food delivery or childcare, then it’ll be reported regardless.
Fact: You can earn up to £1,000 (and £3,000 from April 2027) without reporting to HMRC
As we mentioned before, you can earn up to £1,000 in a tax year (April 6 to April 5) without having to declare anything to HMRC. And in 2027, this goes up to £3,000.
This is in total, not per side hustle. So if you’re working full-time, delivering with Uber and selling handmade goods on Etsy, then whatever you make on Etsy and Uber needs to be less than £1,000 combined to be under the trading allowance.
In addition, if any of the digital platforms you use charge a fee on your earnings, this doesn’t come off your earnings when calculating whether it’s below the allowance – it’s what your customers are charged, not what you see in your bank account.
If earnings are under £1,000, then you don’t need to register for self-assessment or report your income, but it’s worth keeping records of your sales in case HMRC wants to see them.
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Fiction: If I sell my old possessions, I’ll have to pay tax
Lots of people sell on Vinted and eBay and earn a little extra cash on the side, but remember that you’re probably not making any kind of profit. If you clear out your wardrobe and sell some items that you don’t wear anymore, you’re unlikely to sell them for more than you bought them for. So even if you manage to sell more than the trading allowance in a year, you’ve likely still made a loss.
Now, if you bought items specifically to sell them on for a profit, you’re considered to be trading – more on this below.
Fact: You only have to pay tax if you’re “trading” or making a profit
The key word is “trading”. If you’re aiming to make a profit, then you’re likely to be trading and may need to pay tax. HMRC has a handy tool you can use to work out whether you need to pay tax on what you earn.
Selling old clothes and possessions isn’t trading, but buying items with the intention to sell them on for a profit is trading.
If you sell something for a profit of more than £6,000, such as jewellery or art, then you may have to pay capital gains tax on the item – this is completely separate from income tax.
Fiction: If I make something to sell it doesn’t count
If you like to sew children’s clothes, hand-make pottery or bake cupcakes to sell, then you might be wondering if this counts as trading. If your hobby is making you money, you might need to be paying tax on it. You still get the trading allowance as above, though, so you can make a little extra cash tax-free.
Do I need to worry about the side-hustle tax rules?
The new reporting rules for digital platforms have confused a lot of people, whether they have a side hustle or just sell unwanted items. It’s potentially rubbed people up the wrong way, with the opinion that HMRC is putting an extra tax on low earners trying to make a little extra money. This isn’t the case, with the actual tax being exactly the same as before.
However, there is a bit of concern about sellers who do owe tax getting it wrong in their tax returns, because of the confusing timelines. Selling sites like eBay, Vinted and Airbnb have until the end of January to report how much money some users made last year, which may result in some sellers paying more tax. But because the UK tax year runs over a different period – April 6 to April 5 – it could end up confusing people as to how much tax they actually owe.
If you use any digital platforms to sell goods or a service, you should ensure that it’s not considered to be trading and, if it is, that you’re earning less than £1,000 per year from it (or £3,000 from April 2027). If you do think you might need to file a tax return, the deadline is 31 January for the tax year up to April 5 of the previous year.
Can you offset your Ebay sales totals any expenses – eg fees, postage, packaging, printer ink etc?
I am wondering if you sell via various places eg Vinted and Ebay – personal items and not for profit and exceed the amount whereby HMRC are notified
Plus also have savings interest that exceed the PSA – the £1k savings interest (because of the savings rates increase)
(And ironically some of your savings are from your online sales!)
Plus you have a small amount of income eg state pension or a part time job – neither taxable at source and in total from all of your source of income much below the personal allowance
So HMRC are going to require the many people in this situation with multiple small amounts of income to register and complete self assessments even though there will be no liability for tax
Good luck to them finding the Amazon and supermarket gift cards they pay out in then.
Do the same rules apply to survey, receipt scanning and research sites such as Amazon shopper panel, Media Probe, Opinium Research etc?
You have to report any activity that makes you a profit over £1,000. That’s pretty clear.
It’s not £1000 profit, it’s revenue before any deductions