£900 warning issued to people selling on Vinted, Etsy, Depop 'this summer'

A £900 fine warning has been issued to sellers looking to make extra cash this summer. Tax expert Andy Wood reminds sellers seeking extra income this summer about the recent changes to the tax rules impacting digital platforms and how to avoid fines up to £900.

He warned: "Summer is an excellent time for people to explore side hustles and earn extra cash, but sellers should know their tax obligations. With the recent tax changes affecting digital platforms like eBay, Vinted, Depop, and Etsy, sellers need to understand the rules to avoid potential penalties."

He added: “If you sell 30 items or more per year, or if your earnings exceed £1,700 and you make a profit, HMRC will automatically receive your information. Once your income from self-employment reaches £1,001 in a financial year, you become liable for income tax.

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"Additionally, if your annual earnings are less than £1,700 but your self-employment income exceeds £1,000, you could still be liable for tax. You may need to complete a self-assessment tax return if you earn £1,001 or more from online sales. However, if your earnings from a platform are under £1,000 annually, you won't need to inform HMRC or pay additional tax.

"Understanding the tax implications of selling goods online is important for those involved in e-commerce. While selling personal items usually doesn't lead to tax obligations, it's important to be aware of potential liabilities if the activity is considered trading. The £1,000 annual allowance offers a cushion for those doing minor trading, simplifying tax processes for those with side hustles or hobby-based incomes."

He said: "Submitting a tax return can seem challenging, but it's important to meet deadlines to avoid hefty fines. Late filing fees can add up quickly, with penalties starting at £10 for missing the deadline by a day and escalating to £900 after 90 days. Sellers need to prioritise tax compliance to avoid financial penalties and legal issues."

"Many people may not realise they need to file a tax return until they meet specific criteria, such as earning over £1,000 from self-employment or receiving more than £2,500 from rental income. To begin the tax return process, secure a unique taxpayer reference (UTR) and activation code from HMRC. This can take time, so we suggest you register early, especially if you’re filing for the first time.

"Knowing the deadlines for submitting tax returns is key to avoiding penalties. Missing the October 31 deadline for paper submissions leads to a £100 penalty, with further delays resulting in additional charges. Online filing by January 31 offers a more flexible and convenient method.

"The opportunity to amend tax returns within a 12-month period provides a safety net for correcting any errors or changes in circumstances.