If you have a “side hustle” such as selling items on Vinted, HMRC is tightening tax evasion in this area.
Online sellers using platforms such as eBay, Vinted, or Depop must keep an eye on their income from doing this and ensure to report income properly to tax authorities.
Failure to comply could result in a large fine as HMRC now plans to track and report sellers’ earnings.
These new rules came into force on January 1, 2024, but many have failed to recognise these changes and have continued to not report their earnings when needed.
During the cost of living crisis, many have turned to selling their items second-hand online to supplement their income. With these rules in place, if income exceeds a certain threshold, you’ll need to report this.
There is a £1,000 allowance which applies to employed people with an additional income source.
This can come from casual activities such as freelance work, crafting handmade items, house-sitting, or tutoring.
Currently, in the UK, there is a £1,000 tax-free allowance for income earned outside of a full-time job.
After this, you’ll need to register as self-employed and file a self-assessment tax return to declare additional income.
Submitting a self-assessment allows HMRC to collect income tax from those not using a PAYE system. It must be submitted by 31 January.
If you do pay tax through PAYE, it’s important to still submit a self-assessment if you earn over the threshold for your ‘side hustle’ as failure to submit can result in fines.
If you remain below the £1,000 threshold, then you won’t need to submit a tax form but you should keep an eye on how much you’re earning to avoid any fines.