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09 Mar 2025

HMRC crackdown: do you owe tax on Vinted or eBay income?

Sellers who haven't declared online marketplace earnings could face fines

Matthew JenkinSenior writer

Online marketplaces such as Vinted, eBay and Depop are popular platforms to make some extra cash, but regular sellers who fail to pay tax on their income could face fines.

HMRC is sending out around 6,000 letters to people it suspects are not declaring taxable earnings from side hustles.

Read on to find out more about HMRC's crackdown and for advice on how much you can make before facing a tax bill.

HMRC writes to sellers making more than £2,000

HMRC is sending letters to thousands of people it believes have earned income from sales on online marketplaces. But if you're just selling the odd pair of jeans on Vinted, there's no need to panic.

The tax office told Which? it is only writing to people who have made more than 30 transactions and earned over £2,000 from sales in 2022-23 and 2021-22.

The letter reads: 'We have information that shows you’ve earned income from online marketplace sales up to the tax year ending 5 April 2023. You need to tell us about this income. This is because you may owe tax.'

Sellers have 30 days from the date of the letter to contact HMRC and declare their income – whether or not they believe they are liable for tax.

How does the tax office know?

HMRC has long held the power to demand that UK-based apps and websites provide data on the income their users make. It is using this power to decide who to contact about their online sales.

This is separate to an initiative targeting people making money from overseas side hustles, such as renting out holiday homes, which came into effect on 1 January last year.

To catch these sellers, HMRC signed up to the Organisation for Economic Co-operation and Development (OECD) rules, which will allow it to investigate the tax affairs of people earning an income via a company based in another country.

What are the rules on side hustles?

Side hustles – jobs you take on in addition to your main job – are a popular way to boost earnings.

But whether you're selling handcrafted goods or delivering takeaways, any money you make counts as self-employed income and must be declared to the tax office.

You'll be liable to pay income tax on side hustle earnings over £1,000, so anyone making less than this during a tax year can relax.

These earnings are covered by the trading allowance, which also applies to income from activities such as selling goods or services.

Similarly, if your additional income is made from monetising your property in some way – such as renting out your driveway – the property allowance covers income up to £1,000.

If you earn more than this in a year, then it's your responsibility to declare your income to HMRC via a self-assessment tax return.

HMRC recently launched a Tax Help for Hustles campaign alongside a new online guide to help people understand their tax obligations.

Find out more: tax-free income and allowances

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What to do if you owe tax

If you owe tax on income from online marketplaces, it's important you declare it as soon as possible and pay the bill.

To do that you'll need to file a self-assessment tax return. The process can take a while, however. First-time filers will need to register with HMRC and wait for their Unique Taxpayer Reference (UTR) number before they can get started. This usually takes 10 working days to arrive.

When you come to actually filling in your tax return, remember that you'll need to include information about all sources of income, so make sure you have invoices, receipts and bank statements to hand. Read our guide for helpful advice on how to complete a self-assessment form.

You may face a fine

The final deadline for filing and paying tax for 2023-24 was 31 January 2025, so if you owe anything for previous years you'll need to hurry.

Missing the cut-off date for filing incurs an initial £100 penalty. After three months, this increases to £10 per day (for up to 90 days). Further penalties are triggered if your return is more than six or 12 months late.

On top of these fines, you may also face late payment fees. You’ll be charged interest from the date the payment was due.

Find out more: important tax return deadlines

Help if you can't pay

If you've missed the deadline but aren't able to pay the tax you owe, get in touch with HMRC as soon as possible to discuss your options.

If you owe less than £30,000, you may be able to sign up for a payment plan. This allows you to pay in smaller instalments, but you’ll still be charged interest.

To set up a payment plan online yourself, you'll need to be within 60 days of the 31 January payment deadline and not have any other payment plans or debts with HMRC. For other circumstances, call the Payment Support Service on 0300 200 3835.

HMRC says there is no 'standard' arrangement and the time period for instalments will be decided on a case-by-case basis.

If you don't contact HMRC, or refuse to pay your tax bill, you could face debt collection or be taken to court.