HMRC has announced a crackdown on people earning over £1K through side hustles selling goods on digital platforms.
Last week, HMRC spelt out the tax situation for people who make extra money on the side by buying and selling items online for a profit. From 1st January 2024, digital platforms are required to collect and report seller information and income to HMRC. These digital platforms must report sellers’ income by January 2025.
Here, an expert from debt solutions specialists PennyPlan reveals what the rules mean and how you can stay on the right side of the law when selling items online.
Online marketplaces have become an excellent way to make extra cash, especially during the cost of living crisis, with any of us using them to sell unwanted gifts and household items we no longer need.
But now, HMRC has underlined the rules about making a profit on sites such as Vinted and eBay, leaving many to wonder how this will affect them and the additional money they rely on.
The rules require online marketplaces to provide earnings made by sellers, which has since been dubbed the “side hustle tax”.
The regulations state that you can earn an additional £1,000 per year in gross income on top of your regular earnings without having to inform HMRC, but anything more than this will require sellers to register as self-employed and file a tax return.
Chris Lenehan at PennyPlan says: “Websites such as eBay and Vinted are popular among people who previously sold their unwanted clothes at car boot sales or on social media to earn extra money.
“This is for goods that have already been purchased and are being sold for a markdown rather than for-profit purposes. For some struggling to meet the household bills, this could be the difference between falling into arrears and keeping up to date.
“And not only people selling the products will be deeply affected. A decrease in the number of people selling second-hand goods, such as clothing, will have a negative impact on low-income households who rely on them to meet their needs.”
Three ways you can avoid being stung by the “side hustle tax”