eBay have released new data that shows the extent and impact of misinformation around tax reporting for online sellers. In January 2024, Digital Sales Reporting advice outlined that online platforms are now required to share details of accounts with HMRC if they have at least 30 transactions or have sales of around £1,700 or more annually. Quickly, this became known as the “side hustle tax”, with confusion around who falls into this bracket prompting one in three online sellers to move away from listing their own second-hand items online.
In a cost-of-living crisis, making extra money is the key driver for those selling personal items online, with more than half of sellers (56%) reporting this as their primary motivation. And three quarters (76%) of those polled make less than £150 a year from selling online, so they are not impacted by the change in the rules.
eBay is complying fully with the new reporting rules in the UK and elsewhere. However, there has been a lot of confusion and misreporting about the new rules. As HMRC has said, there is no new tax liability here, no new ‘side hustle’ tax. And consumers who are simply selling unwanted possessions are unlikely to have to pay any tax at all. Nearly a quarter of UK households are sitting on unwanted items worth more than £500, and these adults sitting on ‘cash in the attic’ should not be deterred from selling online. Now that it’s free to sell on eBay, this is not just a great way of making some extra money – it’s also good for the environment as these items would otherwise end up in landfill.
– Eve Williams, General Manager, eBay UK
Misconceptions are rife among sellers
But misconceptions are common among online sellers, with two in five believing that they would be subject to tax for selling second-hand goods online. When asked about the specifics, almost six in 10 were unaware that sellers are only reported if they hit 30 transactions or more or have sales of around £1,700 or more. Of those who previously indicated they were aware of the rules, 29% were unaware of the specifics.
The negative impacts are huge
The knock-on impact has been huge. One in three online sellers say they are already selling less than they previously had been. The majority of those selling less (64% of those who have ever sold online, rising to 68% of those who sell regularly) have been negatively impacted in at least one way. These negative effects range from overall decreases in income to extra shifts at work. Given that three quarters (76%) make less than £150 annually from selling online and would not be impacted by the change in the rules, the detrimental effects could be avoided.
The desire to sell online remains
This does not stop the desire to sell online. More than half of UK adults (55%) would be more likely to sell online if they knew they wouldn’t have to pay tax on earnings from selling personal items. And more than a third (37%) of those who have never sold their personal items online would be more likely to do so if they knew they wouldn’t be taxed on their earnings.
The impact of selling online offers environmental as well as financial benefits. 78% of online sellers agree that selling personal items online is environmentally responsible, and over three quarters (76%) of online sellers agree that selling personal items online is important to keep items out of landfill.
When probed about the negative impact of not having extra money from selling clothes online, UK adults reported the following:
- “We are having to use food banks much more often now”
- “As a pensioner it has been a big loss towards an annual holiday or big electricity bill”
- “I will be selling less on the internet now and struggling more to make ends meet. This means no holidays, no newer car, no restaurants, pubs or other little luxuries that I was saving up towards previously.”
- “I’ve had to stop doing it due to the new tax law. It just wouldn’t be worth it”
- “I [am…] unlikely to sell items again with the new rules”
- “I’m taking fewer holidays and eating less”
What does HMRC say?
HMRC has produced guidance for those selling goods or services on a digital platform, explaining that people selling unwanted items online can continue to do so with confidence and without any new tax obligations.
HMRC explain that those who sold at least 30 items or earned roughly £1,700 in 2024 will be contacted by the digital platform in January to say their sales data and some personal information will be sent to HMRC due to new legal obligations. The sharing of sales data does not automatically mean you need to complete a tax return and if you’re just clearing out some old items that you own and no longer need there will be no new liability for tax.
We cannot be clearer – if you are not trading and just occasionally sell unwanted items online – there is no tax due.
As has always been the case, some people who are trading through websites or selling services online may need to be paying tax and registering for Self Assessment.
– Angela MacDonald, Second Permanent Secretary and Deputy Chief Executive Officer, HMRC
