Four million sellers, one big misunderstanding

The Soldly Online Selling Tax Report, 2026

Key findings

• HMRC received reports on 3,988,892 online sellers for the 2025 calendar year, up from 1,466,171 the year before. A 272% rise in twelve months. (Source: BDO, via Freedom of Information request to HMRC.)
• The earnings attached to those reports came to almost £55 billion, more than double the £25.5 billion reported for 2024.
• For goods, platforms must report you once you cross either 30 sales or £1,700 in a calendar year. Services like Airbnb or Uber have no threshold at all.
• Being reported is not the same as owing tax. Selling your own used belongings is not taxable, no matter how much it adds up to.
• The first £1,000 of genuine trading income each year is tax-free under the trading allowance.
• Tax bodies have warned for two years that HMRC has not done enough to explain any of this. They call what is coming the "side hustle time-bomb."

What actually changed

For most of its history, HMRC found undeclared online income the slow way, one investigation at a time. That ended in January 2024.

Since then, under international rules the UK adopted from the OECD, digital platforms have been legally required to collect what their sellers earn and hand it to HMRC once a year. eBay, Vinted, Depop, Etsy, Airbnb, Uber, Deliveroo: they all report. The first batch covered 2024 and landed with HMRC in January 2025. The second, covering 2025, was due by 31 January 2026. That is the batch that produced the four million figure.

The jump is what matters here. The first year caught mostly new and larger sellers, as the platforms scrambled to get their systems running. The second caught nearly everyone who crossed the line, which is why the number almost tripled. HMRC is now finishing an automated system that cross-references what the platforms report against what people put on their tax returns. When the two do not match, the computer flags it. No investigator required.

So if you have sold a fair bit online in the last couple of years, assume HMRC has the data. That part is settled.

The catch almost everyone misses

The bit that gets lost in every scary headline: the data being shared does not mean you owe tax.

Most of the people swept into that four million are not running a business. They are clearing out a wardrobe or shifting furniture they no longer want. Selling your own used possessions is not trading, and it is not taxed, however much it comes to. HMRC says this plainly itself. The one narrow exception is a single item that sells for more than £6,000, which catches almost nobody.

The platform triggers make this worse, because they are so low. Thirty sales sounds like a business. It is not. Sell three unwanted items a month and you are over the line: reported to HMRC, and completely in the clear tax-wise. The trigger counts how much you sell, not whether you made a penny on it.

Then there is the £1,000 trading allowance. Even if you are actually making things to sell or buying stock to flip, the first £1,000 of that income each year is tax-free, and below it you do not need to tell HMRC at all. A lot of small makers and hobby sellers sit comfortably under it without realising they are fine.

Put those together and the headline number looks very different. Four million reported. A large share of them, probably most of the ones selling goods, owe nothing at all.

Why the confusion keeps happening

If the rules are that reassuring for most people, why the panic?

Partly because the rollout was muddled from the start. When the reporting rules came in, they were widely misreported as a new tax on side hustles. There is no new tax. The thresholds and the allowances are exactly what they were. All that changed is HMRC's visibility. But "tax the car-boot generation" makes a better headline than "HMRC adds a data feed," and the myth stuck.

Partly because the official messaging has lagged. The Low Incomes Tax Reform Group and the Chartered Institute of Taxation have both warned, repeatedly, that HMRC has not done enough to tell ordinary sellers what the reports do and do not mean. They called it a time-bomb because the data arrives first and the explanation arrives late, if at all. People get a nudge letter referencing income they had never thought of as taxable, and they assume the worst.

And partly because a change that should help has been announced so clumsily it has made things worse. The government plans to lift the Self Assessment reporting threshold for trading income from £1,000 to £3,000. Useful, on paper: up to 300,000 people will no longer have to file a full return. But two things get missed. It has no start date yet, so nothing has actually changed. And it is a reporting threshold, not a tax-free one. Earn between £1,000 and £3,000 from real trading and you will still owe tax on it, just through a simpler online service instead of a full return. "You won't need to file" quietly becomes "you still need to pay," and most coverage drops the second half.

So who actually owes?

So who actually pays? It comes down to one question: are you selling your own stuff, or are you trading?

Selling your own things. Old clothes, the kids' outgrown gear, furniture, whatever has been gathering dust in the loft. None of it is taxed or reportable as income, no matter how much it adds up to. You might still be reported for crossing thirty sales, and that is fine. If HMRC ever asks, you tell them you were selling your own belongings.

Trading. Buying stock to sell on, or making things to sell, with some regularity and an eye on profit. This is taxable, though only on the profit, and only above the £1,000 allowance.

Take three sellers who each got reported this year.

One nudge letter, three completely different answers. That is why a blanket warning helps nobody, and why working out your own position beats reacting to the headline.

What to do if you have been reported, or had a letter

1. Don't panic, and don't ignore it. A nudge letter is an automated prompt, not a fine and not an investigation. But it does want a response, usually within about 30 days.
2. Work out which camp you are in. Selling your own used items, or trading? That single answer decides almost everything.
3. If you were only selling your own things, you can reply and say so. Keep a rough record of what you sold in case HMRC asks later.
4. If you were trading over £1,000, add up your profit, register for Self Assessment, and declare it. Coming forward voluntarily means far lower penalties than waiting to be found.
5. If you are not sure, check before you reply. Guessing in either direction is what causes the expensive mistakes.