Selling online, renting a room, freelancing or doing gig work alongside a job is common, and many people are genuinely unsure whether any of it is taxable. HMRC now receive data directly from digital platforms, so it is worth checking where you stand.
Not all side income is taxable. Occasionally selling your own unwanted belongings usually isn't trading, and the £1,000 trading and property allowances cover small amounts. But regular trading, lettings and freelance work above those levels need declaring. If some was missed, a voluntary disclosure before HMRC write is generally treated most favourably under HMRC's penalty rules.
Since 1 January 2024, digital platforms that facilitate the sale of goods and services or the letting of property have had to collect seller information and report it to HMRC, with the first reports made in early 2025. HMRC also receive data from banks, card providers and letting agents, and match it against tax returns.
The £1,000 trading allowance and £1,000 property allowance mean small amounts may not need reporting. Above those levels, you normally need to register for self assessment. Selling your own used items for less than you paid is generally not trading income. Buying to resell, making items to sell, or selling regularly for profit usually is trading. Freelance, consultancy and gig work is self-employment income. Renting out a room or a property, including short-term lets, is property income. Rent-a-room relief may apply to a furnished room in your own home.
If income was missed in past years, HMRC's Digital Disclosure Service lets you disclose it, calculate the tax, interest and penalty, and pay. Landlords can use the Let Property Campaign. Coming forward before HMRC contact you normally means lower penalties, and careless errors disclosed unprompted can carry no penalty at all.
If HMRC have already written, whether a nudge letter about online platform income or a compliance check, reply by the deadline. A disclosure is still possible, but it will be treated as prompted, with a higher penalty range. Don't sign a certificate of tax position until you have checked every year properly.
Generally not, if you are occasionally selling your own possessions. Regularly buying and reselling for profit is different and is likely to be trading.
It lets you earn up to £1,000 a year of gross trading income without declaring it. A separate £1,000 allowance applies to property income.
Yes, if it exceeds the relevant allowances or rent-a-room relief. Platforms now report host income to HMRC.
Usually 4 years for innocent errors, 6 for careless and up to 20 for deliberate behaviour. Our guide on how far back HMRC can go explains this.