Background
With Christmas markets springing up across the country, HM Revenue & Customs (HMRC) is reminding anyone selling handmade gifts and trinkets of the need to check if their earnings exceed £1,000 a year.
Individuals making sales of £1,000 or more in a year will need to consider whether they are required to file a self assessment tax return with HMRC. There may well then be income tax and National Insurance contributions to be paid on such income.
Detail
Anyone who earned over the £1,000 threshold from side hustles in the 2024/25 tax year will need to register for self assessment as a sole trader, if they are not already registered. They will need to include the income from their side hustles on their tax return which, must then be filed with HMRC and tax due paid by 31 January 2026.
It is important to remember that what may be considered as just earning a little extra, HMRC might deem ‘trading’. It can depend on the number of transactions made, or the nature of the assets sold, and on whether there is a profit-seeking motive, for example buying items from an outlet and then selling them at a profit online.
HMRC have stressed that there is an important distinction between simply decluttering homes by selling unwanted personal belongings – which does not usually require reporting to HMRC – and trading activities like making items to sell for profit, which may be taxable.
Whether selling handmade Christmas decorations, upcycled furniture, or running a seasonal market stall, it is important to understand when your festive side hustle becomes taxable trading.
The threshold applies to all trading activities in total, so someone earning £600 from craft sales and £500 from online posts and sponsored blogs for example would need to register as the total would exceed £1,000.
The reminder is part of HMRC’s Help for Hustles campaign, which has a dedicated website with tips and advice and a tool to calculate tax liability –HMRC Help For Hustles portal. There is also a useful online tool to check if you need to tell HMRC about income that is not from your employer, or not already included in your Self Assessment – HMRC Online Checker Tool.
When selling unwanted personal belongings from time to time, like old toys and clothes, whether it’s online or in person, you do not usually need to tell HMRC. Although if you sell a single personal item or collection for more than £6,000 then you may need to report this to HMRC.
This year online sellers will also need to be aware that platforms like eBay, Vinted and Facebook Marketplace, have to report data to HMRC. Individual sellers who make 30 or more sales on these sites and are paid ‘over approximately £1,700 annually’ in the words of HMRC, need to be careful as they may have tax return obligations as a result.
If you would like further information on the tax impact of side hustles and online trading, or on any of the points raised above, please contact our Tax Director, Jenny Marks.
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