Thousands of Britons selling clothes on popular online marketplaces like Vinted and eBay could be in for a nasty financial shock, a top tax expert has warned. The alert comes as HM Revenue & Customs (HMRC) gains powerful new tools to track down undeclared income.
From January 1st, digital platforms including Vinted, eBay, Depop, and Airbnb are now legally required to collect and report seller information and transaction details directly to the tax authority. This seismic shift means the 'side hustle' earnings many believed were under the radar are now fully visible.
What This Means for You
This isn't just for high-volume traders. If you've been having a clear-out and made over £1,700 in sales this tax year, or conducted more than 30 transactions, the platform will hand your details to HMRC.
"There's a common misconception that if you're just selling your own old belongings, you're safe," explains tax expert Sean Cockburn from Mazars. "But the lines are blurry. If HMRC deems your activity to be 'trading'—perhaps by frequently sourcing items to resell for a profit—then your earnings are likely taxable."
The Tax Rules You Need to Know
Understanding the difference is critical for every seller:
- Casual Selling: Selling your own used personal items for less than you paid for them is not taxable. This is considered a 'capital loss'.
- Trading: If you are buying goods specifically to resell for a profit, or selling items on behalf of others, you are likely trading. These profits count as taxable income.
For those who are trading, you must declare any profits above your £1,000 annual Trading Allowance. Crucially, you cannot use this allowance to offset losses from casual selling.
Don't Wait for a Letter from HMRC
The expert advice is clear: be proactive. If you think you might have unpaid tax, it is far better to come forward to HMRC voluntarily through the digital disclosure service. This can significantly reduce potential penalties and help you arrange a manageable payment plan.
Waiting for HMRC to contact you first could result in higher fines and a more stressful investigation. With new data flowing in, that knock on the digital door is now more likely than ever.
