Recent clarifications from HM Revenue and Customs (HMRC) have brought both relief and a new set of responsibilities for online sellers and gig economy workers. As we step into 2025, understanding these changes is crucial for anyone engaged in online selling, from clearing out personal items to managing a bustling side hustle.
Theres is no new 'online sales tax', contrary to the swirling rumours of new taxes on personal online sales. HMRC has even issued a press released to confirm that there are no new tax obligations for individuals selling personal items online.
What did change was at the start of this year (2024) online marketplaces were required to report sales data and some personal information to HMRC if a user sells at least 30 items or earns around £1,700 through these platforms. The measure aimed to streamline the tax reporting process and ensure that those who should be paying taxes are correctly identified and informed.
The lack of a further tax will come as a sigh of relief for many who utilise platforms like eBay, Vinted, or AirBnB to sell personal goods or offer services.
Digital platforms are now responsible for sharing details of users who meet specific thresholds with HMRC by the end of January 2025, which is just a month away. This change is designed to help sellers understand their tax obligations without the hassle of tracking and reporting their sales independently.
For casual sellers, the occasional offloading of unwanted items remains tax-free. However, individuals who consistently buy items to resell, craft homemade goods for sale, or offer regular services through digital platforms may need to register for Self Assessment and could be liable for taxes if their income exceeds £1,000 (the 'trading allowance') before expenses within a tax year.
The gig economy and side hustles have become increasingly popular, especially in the face of the ongoing cost-of-living crisis. Platforms like Uber, Deliveroo, and Etsy not only provide flexible work options but also help many supplement their income.
For those earning under £1,000 from such activities, the trading allowance provides a buffer, exempting them from tax up to that amount. However, surpassing this threshold means one must consider registering for Self Assessment and potentially paying taxes on the additional income. If you're completing a tax return for 2024, read our tax return 2024 guide and calculator.
You can use our side hustle pay calculator to get an estimate of how much you need to earn from a 'side hustle' to get a particular 'take home' amount - factoring taxes. For example, if you earn £25,000 from your day job and want an additional take home of £200 a month, you would need to earn £257 a month gross from the side job.