Bottom Line Up Front
HMRC position: Selling unwanted items for less than you paid = no tax. Buying to resell with over £1,000 annual profit = must register as self-employed and pay income tax.
HMRC Confirms: No New “Side Hustle Tax” in 2025
Despite widespread confusion about a new “side hustle tax,” HMRC has been crystal clear: no new taxes have been introduced for UK resellers in 2025. Angela MacDonald, HMRC's Deputy Chief Executive Officer, stated in December 2024:
“We cannot be clearer – if you are not trading and just occasionally sell unwanted items online – there is no tax due.”
What Changed in January 2025: Platform Data Reporting
From January 2025, online platforms including Depop, Vinted, eBay, and Facebook Marketplace must report seller data to HMRC. This is enhanced data collection, not a new tax.
Platform Reporting Thresholds:
Platforms report sellers who in 2024:
- Sold 30+ items in a calendar year, OR
- Earned €2,000+ (approximately £1,700) in a calendar year
Important: Being reported does NOT automatically create tax liability.
The £1,000 Trading Allowance: Your Key Threshold
The £1,000 trading allowance is the most important figure for UK resellers. This allowance covers ALL trading income, not just online selling.
Under £1,000 Annual Profit
- • No self-employment registration required
- • No Self Assessment tax return needed
- • No income tax due on profits
- • HMRC considers this “allowable” trading
Over £1,000 Annual Profit
- • Must register as self-employed with HMRC
- • Must submit annual Self Assessment
- • Pay income tax on profits above allowance
- • May need to pay Class 2 National Insurance
Trading vs Occasional Selling: HMRC's Test
HMRC uses these criteria to determine if you're trading:
Occasional Selling (Not Trading)
- • Selling personal possessions you no longer need
- • Items sold for less than original purchase price
- • Infrequent, irregular sales pattern
- • No profit motive or business intention
- • Sales from personal wardrobe clearouts
Trading Activity (Potentially Taxable)
- • Buying items specifically to resell for profit
- • Regular, systematic buying and selling
- • Items sold for more than purchase price
- • Business-like approach (storage, packaging, advertising)
- • Profit motive and commercial intention
Real UK Reseller Examples
✅ No Tax Due - Occasional Selling:
Sarah clears her wardrobe: Sells 50 dresses on Depop for £10 each (total £500). Originally paid £25+ per dress. Despite 50 transactions, this is personal possession disposal at a loss - no tax liability.
Mark sells collectibles: Occasionally sells vintage items he's owned for years, total annual sales £800. No systematic buying/selling pattern - occasional disposal, no tax due.
Lisa's baby clothes: Sells outgrown children's clothes on Vinted, total sales £300. Personal items, sold at loss - no tax implications.
⚠️ Potentially Taxable - Trading Activity:
Emma flips limited edition trainers: Regularly buys hyped releases for £150, resells for £300. Annual profit £1,500. Systematic profit-making = trading activity requiring self-employment registration.
James sources vintage clothing: Visits charity shops weekly, buys items for £20, sells for £80 on Depop. Annual profit £2,000. Clear trading pattern = taxable business activity.
Alex imports phone accessories: Buys in bulk from China, sells on Facebook Marketplace. Annual profit £3,000. Commercial importing/selling = definitely trading.
Calculating Your Actual Profit
Remember: HMRC taxes profit, not gross sales. Deduct all allowable business expenses:
Profit Calculation Example:
HMRC Mileage Claims for UK Resellers
If you're a registered self-employed trader, you can claim business mileage at HMRC's approved rates:
2025/26 HMRC Mileage Rates:
- Cars and vans: 45p per mile (first 10,000 business miles), then 25p per mile
- Motorcycles: 24p per mile (all distances)
- Bicycles: 20p per mile (all distances)
- Passenger payments: Additional 5p per mile per colleague passenger
Qualifying business journeys: Sourcing trips, post office runs, collection drives, delivery runs, business meetings. Regular home-to-workplace commuting does NOT qualify.
When to Register as Self-Employed
You must register with HMRC for self-employment if:
- Your trading profits exceed £1,000 in a tax year (6 April to 5 April)
- You intend to trade regularly with profit motive
- You want to claim business expenses above the trading allowance
Deadline: Register by 5 October in your business's second tax year, or by 3 months after the month you start trading, whichever is later.
Record Keeping Requirements
Even if you're under the £1,000 threshold, good record keeping protects you:
Essential Records:
- Purchase receipts with dates and descriptions
- Sale records including platform fees
- Payment processing costs
- Shipping and packaging expenses
- Business mileage logs
- Photos of items sold
Retention Period:
- Keep records for at least 5 years after submission deadline
- Digital records acceptable (photos, scans, downloads)
- HMRC can request records during compliance checks
- Penalties apply for inadequate record keeping
Action Steps for 2025
Occasional Sellers:
- Continue as normal - no changes affect you
- Keep basic records if approaching £1,000 profit
- Don't worry about platform data reporting
- Focus on decluttering and selling unwanted items
Active Traders:
- Calculate 2024 profits accurately
- Register as self-employed if over £1,000
- Set up digital record-keeping systems
- Plan quarterly profit reviews
- Consider professional accounting advice
If Unsure:
- Use HMRC's online assessment tool
- Keep detailed records while deciding
- Seek professional advice for complex situations
- Err on the side of caution with record keeping
Key Takeaways for UK Resellers
- No new taxes introduced for resellers in 2025
- Platform data reporting is information gathering, not tax creation
- £1,000 trading allowance remains the crucial threshold
- Profit motive and pattern determine trading vs occasional selling
- Good record keeping protects you from HMRC complications
- Professional advice recommended for consistent £1,000+ profits
This guide reflects HMRC's official position as of February 2025. Tax legislation can be complex and individual circumstances vary. This content is for general guidance only and should not replace professional tax advice for your specific situation.