HMRC is sending “nudge” letters to people it suspects could owe tax from online selling.
As of January 2025, online selling sites such as eBay and Vinted must now sharing selling information with HMRC for tax purposes. Previously, HMRC had to request this information. If you’re selling items online, you are only liable to pay tax if you’re selling for profit, or considered to be trading, and you make over £1,000 in one tax year.
It is unlikely you will need to pay tax if you sell occasionally, or were just selling unwanted items or clothes from your home. Those who sold at least thirty items or earned roughly £1,700 (equivalent to €2,000) or provided a paid-for service, on a website or app, will have their information will be sent to HMRC.
But this does not definitely mean you owe tax – again, you’d only have to pay tax if you’re considered to be trading or selling for profit. HMRC has started sending letters to people based on the information received from selling platforms.
The “one to many” letter states: “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.” Recipients are being given 30 days from the date of the letter to either declare their income or to contact HMRC.
Dawn Register, a tax dispute resolution partner at BDO said: “People who receive this letter may be tempted to file it away but they absolutely should not ignore it. There are a number of ways in which people can make a voluntary disclosure to HMRC about underpaid tax.
“Selecting the most appropriate route will depend on a person’s individual circumstances and the reasons why the inaccuracies occurred. Unpaid tax may be subject to late payment interest – currently at 7% – plus penalties depending on the nature of the reasons for non-compliance, so it often pays to come clean at an early stage.”
If you cannot pay your tax bill and you owe less than £30,000, you may be able to set up a payment plan with HMRC, known as Time to Pay. You’ll need to not have any other payment plans or debts with HMRC, have up to date tax returns, and ask for help within 60 days after the payment deadline.
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