There’s no new tax rule for Vinted, Airbnb and eBay sellers

8 January 2024
What was claimed

Rules around digital platforms sharing information with HMRC amount to a new tax on side-hustles like selling clothes or other unwanted items online.

Our verdict

HMRC has not introduced a new tax. People who earn more than £1,000 a year from selling personal items may have to declare this to HMRC and pay tax on the profits, depending on whether they are considered a ‘trader’. What has changed is that digital platforms now have to automatically share some income data with HMRC.

Posts on social media claiming HMRC has introduced a new tax on people using re-selling apps to earn money from “side hustles” are not true.

From 1 January 2024, companies such as Airbnb, eBay, Uber and Vinted are obliged to collect and share details of the income of sellers made on their platforms with His Majesty’s Revenue & Customs (HMRC).

Some users on social media, including X (formerly Twitter) compared the rule change to a “new ‘side hustle’ tax”. 

However, the change does not amount to a new “tax”, or even a change to existing UK taxation law.  

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When might you be taxed on income from selling items?

HMRC says “You do not need to pay income tax on selling your own personal items, such as used clothes, an old TV, or unwanted furniture.” 

Capital gains tax on personal possessions may need to be paid when a person makes a profit from selling a personal possession for £6,000 or more.

If you buy goods to sell them on, or make them yourself with the intention of selling them for a profit, according to HMRC, you are “likely to be trading” and will have to pay tax on your profits above £1,000.

The government gives the example of someone who makes money from selling unwanted clothes, who then begins to buy items from car boot sales and charity shops, selling them on through online marketplaces where they are sold for more than they paid for them. This is “likely to be trading, and the profits would be taxable” HMRC says.

However, since 2017 people have been allowed a £1,000 tax-free “trading allowance” each year. There’s also a £1,000 property allowance for income from property. 

So even if you are re-selling things like clothes for profit, you are allowed to earn £1,000 from this without paying tax on it. 

This £1,000 trading allowance also covers income from “casual services”, such as babysitting, gardening, hiring personal equipment or power tools or selling second-hand goods. 

However, if an individual is earning more than this threshold, HMRC must be informed. This has been the case since 2017

In some cases you do need to tell them even if you’re earning less than this, like if you cannot use the allowances or you register for self-assessment and declare your income on a tax return.

People with a gross trading income of more than £1,000 must register for a self-assessment.

What has changed?

The new rules about data sharing will mean that digital re-selling platforms now have to automatically pass on data to HMRC if you’re selling 30 or more items or have total earnings over €2,000 (£1,725). 

HMRC already has the power to access information from UK-based platforms on the earnings of sellers, but the change will allow the government to exchange information with other authorities to access data from platforms based outside of the UK.

The first reporting deadline for firms to comply has been set at the end of January 2025.

We’ve previously written about other claims around tax and finance, including how much money is lost to benefit fraud compared to tax avoidance and how personal tax threshold changes have affected minimum wage earnings

Image courtesy of Kristin Hardwick

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