I’m being profitable from promoting outdated garments on-line, do I must declare this to HMRC?

I got stuck in after having a clear out of my wardrobe and have started selling quite a few old clothes and other items on Vinted and Ebay.

I’m hoping to make a bit of extra cash ahead of the summer, while getting rid of things that I don’t need anymore.

I don’t know how much money I will earn from doing this, but I’ve read online that people selling online might have to pay tax on their earnings.

I don’t want to fall foul of HMRC rules, so what do I need to do to either make sure I don’t need to pay tax, or to do so if I do need to pay.

Also, how would the taxman find out if I made a bit more money than I should do without paying tax? 

It was recently announced that HMRC is investing £40million into resources to find people who are purposely avoiding tax

Harvey Dorset, of This is Money, replies: Selling old and unwanted items online has never been easier, and there are huge number of platforms that allow you to do so.

Reselling has become one of the most popular forms of side hustle, with many even buying and reselling items for a profit.

However, as the popularity of reselling has surged, the taxman has also cottoned on to the hefty profits that some are making.

HMRC says that if you earn more than £1,000 from reselling each tax year, or any other side hustle, then you must inform HMRC.

By the end of the current parliament, no later than August 2029, the trading income threshold is set to triple to £3,000.

Meanwhile, HMRC has started receiving data on sales and users for anyone making more than 30 transactions per year, regardless of value.

For Vinted, HMRC receives data for those selling more than 30 items or earning more than £1,700 from sales over any 365-day period.

It was recently announced that HMRC is investing £40million into resources to find people who are purposely avoiding tax.

Lee Murphy, managing director of The Accountancy Partnership, replies: HMRC uses data provided by the platform, whether this is Etsy, Vinted or even eBay, to match against each individual’s tax records.

Those who’ve exceeded an annual trading allowance of £1,000 and also fail to declare this may receive reminder letters to ensure that they get their tax return done.

While you may think this is just a scare tactic, ignoring these types of letters may lead to further full tax inquiries and criminal investigations.

If you are selling unwanted personal items and not making repeat trades or dropshipping, then you’re unlikely to face HMRC scrutiny.

If you do, however, earn over £1,000 from your side hustle each year, or you exceed 30 sales within one year, then you must let HMRC know about this to avoid getting any fines or being under any sort of criminal investigation.

If you’re unsure how many items you’ve sold or how much money you’ve made so far, then it’s best to go back and find your detailed sale records.

Also keep track of any expenses that’ve gone with the sales; stamps, postage materials and courier payments, as you could get some of this back when the time comes to doing your Self-Assessment tax form.