13/03/2025
HMRC are about to start sending 6000 letters out about "side hustle" income.
First of all, don't panic if you get one. This is nothing new, but HMRC are now receiving information from places like Ebay or Vinted which they didn't get previously.
If you are trying to make a profit from buying and selling, you are potentially liable. If you are just selling stuff from your loft or garage, this probably doesn't involve you.
The trading rules still apply - the 9 badges of trade (or Badgers of Trade as we called it at the old Inland Revenue!) are still the overriding thing we need to consider.
So, have a look at the link below, and do feel free to contact me if you have any concerns.
https://www.accountancydaily.co/online-side-hustlers-sent-hmrc-letters-about-unpaid-tax
The text is below if the link doesn't work:
HMRC has started sending letters to online sellers and side hustlers it suspects of not paying tax or disclosing sales on online platforms in 2022-23, giving 30 days to respond
These letters need immediate action as anyone who receives a letter must respond within 30 days declaring any untaxed income, or HMRC will open a compliance check. Side hustlers in the sights of HMRC include online content creators, landlords, sellers importing cheap goods to resell, dog walkers and tutors.
In the letters, HMRC states that it has information that the individual has earned income from online marketplace sales up to the tax year ending 5 April 2023, which may not have been declared.
‘You need to tell us about this income. This is because you may owe tax,’ HMRC stressed. ‘You’re likely to be trading if you buy or make goods to sell at a profit. This means you may have to pay tax on your profits.’
If total income is more than the £1,000 trading allowance for the tax year (6 April to 5 April), it has to be declared to HMRC.
Sellers with income to declare from any tax year up to 5 April 2023 must take swift actions. Useful guidance is available on gov.uk page, Tell HMRC about underpaid tax from previous years, then follow the instructions.
Alternatively, there is a dedicated helpline number on 0300 123 0998 and quote the reference number at the top of the letter.
Once a taxpayer has contacted HMRC, the tax authority will respond by letter with a payment reference number (PRN).
There will then be a deadline of 90 days to declare income and pay anything owed, including any interest and penalties.
HMRC now has access to a mountain of data after online platforms such as eBay, Vinted, Facebook Marketplaces, and so forth, had to disclose sales activity of all their sellers.
The first reports landed in January, giving HMRC plenty of ammunition to target side hustlers if suspects of tax avoidance and evasion.
Andrew Parkes, national tax director at Andersen LLP, said: ‘The people who do have to worry are those who thought that HMRC would never find out about their little money spinner, ie, people who are importing goods, also known as drop shipping, from mainly China to UK customers and “forget” to tell HMRC they had started trading.
‘It is true that HMRC had a difficult time finding these people, thus giving them an edge over more diligent traders, but it was never impossible as with enough effort HMRC could always get the information, they just generally had easier targets to work with.’
The letter campaign is targeting people who sell goods online in a structured way that is more than just ad hoc emptying of the loft, but even here it is important to realise that there is a cap on the value of the product sold, so an Antique Roadshow type discovery will most certainly incur a capital gains tax (CGT) charge.
HMRC added: ‘You’re unlikely to pay tax if you sell personal items from your home. For example, contents of a loft or garage. However, depending on the items you sell and how much you sell them for, you may need to pay capital gains tax. This applies to selling personal possessions where the item is worth more than £6,000.’
There is guidance and a basic HMRC tool to assess whether selling is deemed as taxable activity, available at Check if you need to tell HMRC about your income from online platforms
HMRC has started sending letters to online sellers and side hustlers it suspects of not paying tax or disclosing sales on online platforms in 2022-23, giving 30 days to respond
