HMRC and side hustle income — what UK marketplace sellers need to know in 2026

What changed in 2024 and why everyone's talking about it

In January 2024, UK marketplaces (Vinted, eBay, Depop, Etsy, Airbnb and others) started reporting seller data directly to HMRC under a rule called DAC7. The press picked this up and ran headlines like "HMRC to tax everyone selling on Vinted", which is mostly wrong but understandably scary.

The reality: nothing changed about who owes tax. What changed is that HMRC now sees the data, which means people who used to fly under the radar can no longer.

The £1,000 trading allowance

UK residents have a £1,000 trading allowance each tax year (6 April to 5 April). If your total side-hustle income from buying and selling is under £1,000, you don't need to register with HMRC and you don't owe tax on it.

This allowance is per person per tax year, not per platform. So £600 on Vinted + £500 on eBay = £1,100 total = you've crossed the threshold.

Are you "selling" or "trading"?

HMRC distinguishes between:

• Selling your own stuff — clearing out your wardrobe, getting rid of items you previously bought for personal use. This is generally not taxable, no matter the amount.
• Trading — buying things to resell, making things to sell, doing it regularly with profit intent. This is taxable beyond the trading allowance.

HMRC uses the "badges of trade" to decide which side you're on. Roughly:

• Did you buy it intending to sell? (trading)
• Do you do this regularly and frequently? (trading)
• Did you modify it to sell? (trading)
• Is it organised like a business? (trading)
• Did you finance it like a business? (trading)

DAC7 — what the marketplaces report

Under DAC7, UK marketplaces report sellers to HMRC if they exceed either of these thresholds in a calendar year:

• £1,735 (€2,000) in gross sales, OR
• 30 transactions

If you cross either, the marketplace sends HMRC: your name, address, National Insurance number (if they have it), total sales, number of transactions, and which marketplace they came from.

HMRC then cross-references with your tax return. If you've declared, fine. If you haven't, you may get a letter asking why.

Do I actually owe tax?

Walk through this:

1. Are you selling your own personal items only? If yes, you generally don't owe income tax regardless of total. (Capital Gains Tax could apply on individual items selling for over £6,000 — rare for clothes.)
2. Are you trading (buying to resell, making to sell)? Continue.
3. Is your total trading income under £1,000? No registration needed, no tax owed.
4. Is your total trading income over £1,000? Register for Self Assessment. Pay tax on the amount above £1,000 (or on profit after deducting expenses if higher).

How to register for Self Assessment

1. Go to gov.uk/register-for-self-assessment.
2. Select "I'm self-employed".
3. Get your Unique Taxpayer Reference (UTR) in the post within 10 working days.
4. Set up your Government Gateway account.
5. File your return online by 31 January following the tax year (e.g. tax year ending 5 April 2026 → return due by 31 January 2027).

If your trading income is low (under about £5,000), you can also tick "I want to use the £1,000 trading allowance" on the return and not bother with expenses.

What you can deduct

If you go the full Self Assessment route (not using the £1,000 allowance), you can deduct legitimate business expenses:

• Postage costs (Royal Mail, Evri, InPost)
• Packaging materials (polymailers, bubble mailers, tape)
• Marketplace fees and payment processing fees
• Cost of items bought specifically to resell
• Storage costs if you rent space
• Mileage to charity shops / suppliers (45p/mile for the first 10,000 miles)
• A reasonable portion of your phone bill and internet if used for the business
• Any tools or apps you pay for (subscription to listing tools, for example)

You can't deduct: clothes you intended to keep but didn't, "general living expenses", things bought before you started trading.

What records to keep

HMRC requires you to keep records for 5 years after the relevant tax year. For each sale, keep:

• Date of sale
• Item description
• Sale price
• Cost of the item (if bought to resell)
• Postage cost
• Marketplace fees
• Platform (Vinted / eBay / Depop / etc)

A simple spreadsheet works for most casual sellers. Apps that auto-track (Snappy's HMRC tracker, for example) save the manual work.

Deadlines you need to know

Worked scenarios

Scenario A — Clearing out the wardrobe (Sarah)

Sarah lists 40 items on Vinted over six months. Total sales: £620. She bought most of them for herself years ago, sold them when she had a wardrobe clear-out.

HMRC impact: Zero. She's selling her own personal items, not trading. No registration, no return, no tax.

Scenario B — Casual cross-poster (Tom)

Tom occasionally buys things at car boot sales and resells on eBay. Total sales over the year: £900. Profit: £600 after expenses.

HMRC impact: Trading, but under the £1,000 allowance. No registration needed, no tax owed.

Scenario C — Serious reseller (Maya)

Maya buys vintage from charity shops and resells on Depop. Sales over the year: £8,000. Cost of items + postage + fees: £3,500. Profit: £4,500.

HMRC impact: Trading and well above the allowance. Must register for Self Assessment. Pays income tax + Class 4 National Insurance on the £4,500 profit (or the £7,000 net if she uses the £1,000 allowance instead of expenses).

Scenario D — Hobby + side hustle blur (Ben)

Ben sells his own old electronics (PlayStation, laptop) plus a few items he refurbishes and resells. Personal items: £1,200 (not taxable). Resale items: £800 sales / £400 profit.

HMRC impact: Trading income only counts the resale activity. £800 in sales is below the £1,735 DAC7 marketplace reporting threshold and well within the trading allowance. No tax owed. He's not required to register.

FAQ