The Risks of Not Declaring Your Reselling Income to HMRC

Introduction: Don’t Let Small Sales Become Big Trouble

Even casual resellers on eBay, Vinted, Depop, or other platforms can face serious penalties if they don’t report profits above the allowances. Don’t let seemingly harmless side chores snowball into costly legal headaches.

What is the Requirement—and Why It Matters

In the UK, anyone earning more than £1,000 per tax year from online or side‑hustle activities must register as self‑employed, report all income, and pay tax via Self Assessment. Platforms must now report seller earnings to HMRC—starting January 2024 for reporting due January 2025.

How HMRC Tracks Reseller Income

Platform Reporting: eBay, Vinted, Depop, Airbnb, and others transmit seller data to HMRC .

Automated Insight: HMRC uses its Connect system to cross‑check bank records, sales receipts, and lifestyle inconsistencies .

“Nudge” Letters: Thousands of sellers are being contacted—those with 30+ sales or over £2,000 in profit—for undeclared income up to April 2023 .

Real Cases: Everyday Sellers Warned

Around 6,000 sellers received letters for 2022/23 online income, warned of penalties if ignored .

On Reddit, one user shared:

“I ... made around £8–10k in profit … now owing … tax, plus penalty fees, interest etc.”

Sellers reported being told 30+ items or sales over £1,600/£3,000 would trigger HMRC attention .

Why This Matters for Resellers

Fines & Interest: Late filing begins at £100, escalating over time. HMRC may add interest (7 %+ annually) .

Severe Penalties: Failure to declare could incur fines of up to 100–200 % of unpaid tax or legal action—even imprisonment in extreme cases.

Stress for “Casual” Sellers: Even non‑profit shops may face demands for Self Assessment filings, with no profit proof .

Other Tools to Combine With Tax Compliance

Beyond Keepa and repricing tools, resellers should combine:

Accounting apps (e.g. QuickBooks, FreeAgent) to log sales and expenses.

HMRC’s Self Assessment tool and voluntary disclosure forms to correct past omissions.

Final Tips for Reseller Tax Success

Track everything: document cost, sale price, fees, and profit per item.

Use allowances: claim the £1,000 trading allowance; offset legitimate costs.

Act early: when HMRC sends a nudge letter, respond within 30 days to reduce penalties via voluntary disclosure.

Seek expert help: if unsure, speak to an accountant or HMRC itself to clarify filing status.

Conclusion

Ignoring small profits can lead to unexpected fines, interest, and stress. But with proper record‑keeping, timely disclosures, and using allowances wisely, resellers can avoid HMRC traps and keep their side hustles safe and legal.