Got a letter from HMRC about online selling or side income? What to do

Why HMRC is writing to so many people

Since 1 January 2024, online platforms such as Vinted, eBay, Etsy, Depop and Airbnb have had to report sellers to HMRC if they make 30 or more sales, or receive about £1,700, in a calendar year.

The numbers are huge. According to BDO, HMRC received data on nearly 4 million online sellers for 2025, with almost £55 billion of earnings between them, and is building systems to match that data against tax returns. Source: BDO, March 2026.

HMRC also gets information from banks, payment providers, letting agents and other sources. So letters are going out to sellers, hosts, content creators, delivery riders and other gig workers.

Is the letter real?

Check before you reply. A genuine HMRC letter:

• Arrives by post or in your HMRC online account
• Uses your name and often your National Insurance number or UTR
• Does not ask you to pay through a link in a text or email

If you are unsure, sign in to your HMRC account directly, or call HMRC using the number on GOV.UK, not the one in the message. Scam texts and emails pretending to be HMRC are common.

What type of letter is it?

• A nudge letter, sometimes called a one-to-many letter, asks you to check your tax and correct anything that is wrong. It is not an investigation, but HMRC expects a response if one is asked for.
• A compliance check is more formal. It names the tax year and asks for specific information by a deadline. Consider getting an accountant's help.
• A Simple Assessment is a bill HMRC has already worked out. Check the figures, and challenge them within 60 days if they are wrong.

Step 1: work out whether you owe anything

The trading allowance rises to £3,000 from 6 April 2027, but earlier years still use £1,000. Read tax on selling online for the full rules.

Step 2a: if you owe nothing

If the letter asks you to respond, tell HMRC why no tax is due, for example "I was selling my own personal possessions" or "my trading income was below the trading allowance". Keep your records: platform statements, and notes of what you sold.

Step 2b: if you owe tax

1. Work out the profit for each tax year affected. You can deduct your costs, or the trading allowance, whichever is higher.
2. Tell HMRC. If you have never registered, register for Self Assessment, or use HMRC's digital disclosure service for past years. The letter usually says which route to use.
3. Pay what you owe plus interest. If you cannot pay in one go, ask for a Time to Pay arrangement.

Coming forward yourself, especially before HMRC opens a check, usually means lower penalties than waiting to be found. Get help from an accountant or the tax charity TaxAid if the amounts are large or it covers several years.

Free toolSide hustle tax calculatorSee how much tax and National Insurance you owe on side income, and what to set aside each month.→

How to avoid it next time

• Keep a simple spreadsheet of what you buy, sell and spend
• Keep side hustle money in a separate account
• Check your position before 5 October each year, the deadline to register for the year just ended
• Use the Self Assessment step-by-step guide if you need to file

Common questions

Does a platform report mean I owe tax?

No. GOV.UK says being reported does not automatically mean you owe tax. It gives HMRC information to check.

How far back can HMRC go?

Usually four years for genuine mistakes, six years if you were careless, and up to twenty years if income was deliberately hidden.

Should I ignore a nudge letter if I think I owe nothing?

No. If it asks for a reply, reply and explain why. Ignoring it can lead to a formal check.