If you sell on eBay, Vinted, Etsy, Depop or Airbnb, a letter from HMRC may be on its way, and a lot of people who receive one panic unnecessarily. HMRC now receives sales data directly from online platforms, and it is using that data to write to sellers it thinks may have undeclared income. These are known as nudge letters.
The important thing to understand is that getting a letter does not mean you owe tax. It means HMRC has data and wants you to check your position. Equally, ignoring a letter is the worst thing you can do. Here is what is actually going on, the two thresholds that everyone confuses, and exactly what to do if a letter arrives.
In a nutshell
- Platforms now report sellers to HMRC. eBay, Vinted, Etsy and others share data automatically.
- Two different thresholds get confused. One decides if you are reported, the other if you owe tax.
- Selling your own clutter is usually fine. Clearing your wardrobe is not trading.
- Tax depends on the £1,000 trading allowance. Trading income above that must be declared.
- A letter is not a bill. But you should never ignore it.
- If you do owe, come forward. Voluntary disclosure costs far less than being caught.
1. Why these letters are landing now
Since January 2024, online platforms operating in the UK have had to collect information about their sellers and report it to HMRC under the Reporting Rules for Digital Platforms. The first reports covered 2024 and were sent in early 2025, and HMRC received data on almost four million sellers.
HMRC matches that platform data against Self Assessment records. Where someone appears to be selling at a level that looks like a business, but has not declared any income, HMRC sends a nudge letter inviting them to review their tax affairs. It is a prompt, not a formal investigation, but it is backed by real data, so it should be taken seriously.
2. Two thresholds people confuse
This is the heart of the confusion, and getting it clear will save you a lot of worry. There are two completely separate thresholds.
The first is the platform reporting threshold. A platform will report you to HMRC if, in a calendar year, you make 30 or more sales of goods, or receive more than around £1,700 (the figure is set in euros, at 2,000 euros). If you are under both, the platform does not report you. This threshold is only about whether your data is shared. It says nothing about whether you owe tax.
The second is the tax threshold, and it is much lower. This is the £1,000 trading allowance, measured over the tax year of 6 April to 5 April. If your total trading income is above £1,000, you may need to declare it, whatever the platform did or did not report.
So it is perfectly possible to be reported but owe nothing, or to be below the reporting threshold but still have tax to pay. They are two different tests for two different purposes.
3. Selling your own clutter is usually fine
Here is the reassuring part. If you are simply selling your own used personal belongings, clearing out your wardrobe, selling the kids' old toys, offloading furniture or a phone you upgraded, that is not trading, and it is not taxable. It does not matter if you go over the platform reporting threshold. Selling your own possessions second hand is not a taxable activity.
There is one exception to keep in mind. If you sell a single personal item for more than £6,000, such as a piece of jewellery, art or a collectible, that can fall within Capital Gains Tax rules. For the everyday declutter, though, you have nothing to declare and nothing to pay.
4. When you actually owe tax
You are trading, and potentially taxable, when you buy or make things specifically to sell at a profit. Buying job lots to resell, flipping trainers, making crafts for sale, or dropshipping are all trading. So is providing services or renting out a room through a platform.
If your total income from that kind of activity is more than the £1,000 trading allowance in a tax year, you must tell HMRC and register for Self Assessment. If it is under £1,000, the trading allowance covers it and you have nothing to report. Remember this is gross income before costs, and it is measured across the tax year, not the calendar year the platform uses.
5. What to do if a letter lands
First, do not panic, and do not ignore it. A nudge letter is an invitation to check, not an accusation or a demand for money. But HMRC does expect a response, and staying silent can turn a simple review into a formal enquiry.
The right steps are:
- Read what it asks. Letters vary, and some ask you to respond by a set date.
- Work out your real position. Were you selling personal items, or trading? Add up any genuine trading income across the tax year.
- Keep your evidence. Bank statements, platform payout reports, receipts for stock and postage all help you show the true picture.
- Respond, even if you owe nothing. If you were only selling personal belongings, you can say so. If HMRC asked for a reply, give one.
- Get advice if you are unsure. A short conversation with an accountant can tell you quickly whether you have anything to declare.
6. How to put it right
If you review your position and realise you do have undeclared trading income, the best move is to come forward voluntarily rather than wait. HMRC runs a Digital Disclosure Service for exactly this, letting you bring your tax up to date.
Coming forward voluntarily almost always costs less than being caught. Penalties are calculated on how HMRC discovers the problem, and an unprompted disclosure attracts much lower penalties than one dragged out of you after you ignored a letter. In serious cases, deliberately hiding income can lead to far higher penalties and even investigation, so a tidy voluntary disclosure now is genuine protection.
A worked example: two Vinted sellers
Anna spent the year clearing out her family's old clothes, toys and a few household bits on Vinted. She made 90 sales totalling £1,400. Because she made more than 30 sales, Vinted reports her to HMRC, and she may well get a nudge letter. But she was selling her own used possessions, not trading, so she owes nothing. She simply confirms her position if asked.
Ben, by contrast, spent the year buying second hand trainers at car boot sales and reselling them online at a profit. He made £3,000 of sales. Ben is trading, and because his income is above the £1,000 trading allowance, he must register for Self Assessment and declare the profit. If he gets a nudge letter and ignores it, he risks penalties on top of the tax. If he comes forward, he pays the tax due and, in all likelihood, a much smaller penalty or none at all.
Things to watch out for
- A report is not a bill. Being reported by a platform does not mean you owe tax.
- The two thresholds are different. Around £1,700 or 30 sales is about reporting; £1,000 is about tax.
- Calendar year versus tax year. Platforms report by calendar year, your tax is measured 6 April to 5 April.
- Never ignore a letter. Silence can escalate a simple review into an enquiry.
- Voluntary always beats prompted. Coming forward yourself keeps penalties low.
How Ollen Services Can Help
If a nudge letter has landed, or you sell online and are simply not sure where you stand, we can give you a clear answer fast. We will work out whether you were trading or just selling personal items, calculate any genuine tax due, and handle the response to HMRC so you deal with it once, correctly, rather than worrying about it for months.
Where there is undeclared income, we manage the voluntary disclosure for you, keeping penalties as low as possible and getting you back on the right side of HMRC.
Call us on 07513 491 259 or email hello@ollenservices.co.uk. A letter from HMRC is far less frightening once someone who does this every day is in your corner.