Are You Selling Goods or Services on a Digital Platform? What You Need to Know About Tax in 2025 and ownward

Example 1 – Decluttering (No Tax)

Sarah’s Situation
Sarah decided to declutter her wardrobe and sold 40 items of second-hand clothing on Vinted over five months. She made £480 in total, with individual items selling for anywhere between £5 and £20.

Key Facts

All items were originally purchased for personal use

Every item was sold for less than its original purchase price

No buying to resell

No profit motive

No regular or structured business pattern

Tax Position

This type of activity is not trading.
HMRC cannot tax Sarah for disposing of personal possessions at a loss — even if she sells large quantities.

Conclusion
→ No tax. No Self Assessment required.
→ Even if Vinted or HMRC contacts her, she needs to explain that the sales were personal, second-hand items.

This example is typical and should reassure most casual sellers.

Example 2 – Side Hustle Reseller (Tax Applies)

James’s Situation
James loves finding vintage jackets at weekend markets. He buys each one for around £30 and resells them on Depop for about £70. Over the year, he sells around 60 jackets, generating roughly £4,200 of sales.

After subtracting his costs:

Purchase costs: 60 × £30 = £1,800

Selling fees, packaging & postage: approx. £1,000

Net profit: £2,400

Key Indicators of Trading

Buying stock specifically to resell

Clear intention to make a profit

Regular and repeated activity

A consistent pattern of listings

Activity resembling a small business

Tax Position
James is running a reselling business, not simply decluttering.

His profit of £2,400 exceeds the £1,000 Trading Allowance, meaning he must:

Register as self-employed

File a Self Assessment tax return

Report trading income and allowable expenses

Conclusion
→ Tax applies. Self-assessment required.
→ James may also need to consider NI contributions and record-keeping.

This is a textbook example of a digital side hustle that HMRC treats as a business.

Example 3 – Etsy Creator (Tax Applies)

Mia’s Situation
Mia creates personalised jewellery in her spare time and sells her pieces through Etsy. Her total annual sales are £6,500. After deducting material costs, Etsy fees, and packaging expenses, her net profit is around £3,200.

Key Facts

She creates products with the intention of selling

Her income is recurring and predictable

She actively markets her items

She reinvests profits into materials and tools

She is clearly operating a business, even if part-time

Tax Position

This is a self-employed creative business.

Mia must:

Register as self-employed

File a Self Assessment

Declare her profit. Keep receipts for materials, tools, and postage

Because her profit exceeds £12,570?
 Only the profit above the personal allowance becomes taxable.
Because her profit exceeds £1,000?
 Self-assessment is required regardless.

Conclusion

Tax applies. Must declare income as a business.
This example aligns with both HMRC guidance and Etsy’s seller expectations.

Example 4 – “I Didn’t Know I Was Trading” (Grey Area Case)

Amira’s Situation
Amira clears out her wardrobe but also buys trendy items on sale to resell occasionally. Over the year, she sells 25 of her own items and 15 items she bought specifically to resell.

She made:

£600 from personal items (no profit → not taxable)

£1,400 profit from resale items → taxable

HMRC may view part of her activity as trading.

Conclusion

Hybrid cases exist — and they often trigger HMRC letters.
Professional assessment can avoid penalties and incorrect disclosure.