Had a letter from HMRC about your online sales?

The short version

• Check it's really from HMRC before you do anything (see below). HMRC won't ask you to pay by a link in a text or email.
• Don't ignore it. Reply by the date in the letter, in the way it asks.
• Selling your own unwanted things is unlikely to be taxable, however many items you sell. Say so, briefly, and that's usually the end of it.
• Buying or making things to sell at a profit is likely to be trading. If trading income (before costs) was over £1,000 in a tax year, it should have been reported.
• Use the checker below to see what each tax year needs. Recent years may just need registering and filing on time; earlier years go through HMRC's digital disclosure service.
• Telling HMRC yourself, and helping fully, keeps penalties at the low end.

First: is it really from HMRC?

Scammers copy HMRC's style, and online sellers are an obvious target. A real HMRC letter about your sales won't ask for your bank details, or for payment through a link, a text or a gift card, and won't threaten arrest. Check it against HMRC's list of genuine letters, and contact HMRC through gov.uk rather than any number or link in the letter if you're unsure. Signing in to your HMRC account on gov.uk is another way to see what HMRC has sent you.

What arrived, and how urgent is it?

Why HMRC knows about your sales

Since 1 January 2024, UK platforms have had to collect sellers' details and report their sales to HMRC each January. You're left out of the report only if you make fewer than 30 sales and receive less than €2,000 (about £1,700) in the calendar year. The platform must send you a copy of what it reported.

Two things about that report trip people up:

• It's a calendar year (January to December), but tax works on tax years (6 April to 5 April). You have to re-cut your sales by date.
• It's what you received after the platform's fees, for everything you sold, personal items included. It isn't your profit and it isn't a figure HMRC will tax as it stands.

HMRC has also written to sellers about earlier years: Which? reported letters to people with more than 30 transactions and over £2,000 of sales in 2021/22 and 2022/23, before platform reporting began.

Personal possessions, or trading?

This decides almost everything. HMRC's own examples:

• Clearing out the attic and selling unwanted things, none worth over £6,000: unlikely to need telling HMRC, "no matter how many items you sell".
• Buying from car boot sales and charity shops to sell for more, regularly: you may need to tell HMRC.
• Making things to sell, even as a hobby (upcycled furniture, crafts): that's trading, but the £1,000 trading allowance may cover it.
• A single possession (or a set) sold for more than £6,000: check Capital Gains Tax, even if it was personal.

Many sellers have both: a wardrobe clear-out and a few things bought to resell. Only the trading part counts towards the £1,000. Our Vinted tax guide goes through the tests in more detail.

Checker: which tax years do you need to put right?

Runs in your browser. Nothing you type is sent or stored. It applies the £1,000 trading allowance on its own: if you had other self-employed income, or file a tax return anyway, the answer can be different.

How the deadlines work

For each tax year with trading income over £1,000:

• Register for Self Assessment by 5 October after the tax year ends (for 2025/26, that was 5 October 2026).
• File and pay by 31 January the year after (for 2025/26, 31 January 2027).
• Missed 5 October but it's not 31 January yet? Register straight away (how to register). The penalty for registering late is a percentage of the tax still unpaid on 31 January, so if you file and pay in full by then, there's usually nothing to pay for being late.
• Past 31 January? That year needs putting right as an earlier year (next section), with interest and possibly a penalty.

Putting earlier years right

HMRC's route for undeclared income from earlier years is the digital disclosure service. If your letter tells you a different way to respond, follow the letter. HMRC's disclosure guide (updated 15 October 2026) sets out four steps:

1. Notify. Tell HMRC you want to make a disclosure. HMRC writes back with a disclosure reference number and a payment reference.
2. Disclose the income for each year, within 90 days of HMRC acknowledging your notification. Start gathering records before you notify.
3. Offer and pay the tax, interest and any penalty. If you can't pay it all by the deadline, you must have a payment arrangement agreed with HMRC by then.
4. Answer any follow-up questions from HMRC.

How many years? The guide ties it to behaviour:

The 20-year line sounds frightening, but it's a maximum: you only include years in which you actually had taxable trading income. For most online sellers that's a handful of years at most. HMRC has calculators for interest and penalties linked from the disclosure page; you work out the tax for each year first. Our seller tax calculator estimates it for the 2025/26 and 2026/27 years. For older years, use HMRC's own tools or an accountant.

Where tax was deliberately hidden, HMRC has a separate process (the contractual disclosure facility). That needs a specialist adviser, not a guide.

What are the penalties?

Not registering when you should have is a "failure to notify". The penalty is a percentage of the tax that went unpaid because of it, and it falls within a range set by HMRC's factsheet CC/FS11:

• Unprompted means you told HMRC before you had reason to think it was about to find out. Once HMRC has started a check, a disclosure is normally prompted.
• Where you land in the range depends on how much you help: telling HMRC what went wrong, helping it work out the figures, and giving access to records.
• With a reasonable excuse (something outside your control that stopped you, such as serious illness), there's no penalty for a non-deliberate failure, as long as you put it right without delay once the excuse ends.
• Interest is charged on the tax from when it was due, on top of any penalty.

Example: Jas bought trainers to resell in 2024/25 and made £3,000 of trading income, £1,200 profit after £1,800 of costs (more than the £1,000 allowance, so she deducts the real costs). Nothing was registered. Jas has a job that uses up her personal allowance, so the £1,200 is taxed at 20%: £240. Profits that small pay no Class 4 National Insurance. A non-deliberate penalty of, say, 10% of that is £24, plus interest. It's real money, but far smaller than most people fear. Figures are illustrative.

Replying to the letter

Use the method the letter gives (often an online form or a phone number). Keep it short and factual. If your sales were personal, something like:

If some of it was trading, say what you're doing instead: "I've registered for Self Assessment on [date] and will include 2025/26 in my return", or "I'm disclosing 2023/24 and 2024/25 through the digital disclosure service". Don't guess figures in the reply: work them out from your records first.

Rebuilding your records

You'll need a tax-year figure for each affected year. Pull together:

• the platform's sales history export and the annual report it sent you (re-cut by date into 6 April to 5 April years),
• payout records and bank statements (payouts are after fees),
• what you paid for stock: receipts, emails, or an honest note of where things came from and roughly what they cost (label estimates as estimates),
• postage and packaging costs.

For each year, compare the £1,000 trading allowance with your actual costs and use whichever is better (you can't use both). Keep the records for at least five years after the 31 January filing deadline.

An AI helper for the paperwork (optional)

If you use ChatGPT, Gemini or Claude, our free Seller Skills pack sorts a year's sales into tax-year totals and flags whether you look like a trader. The paid Pro version (£12) includes an HMRC-letter helper that follows the steps on this page: what the letter is, personal vs trading, a year-by-year table, a records rebuild and a draft reply. Both are made by the same people as this site and are optional; this guide and the calculator stay free. They give estimates and drafts, not tax advice.

Free help

• TaxAid: a charity giving free tax help to people on low incomes who can't afford an adviser.
• An accountant or chartered tax adviser, for several years, larger sums or a formal check.
• HMRC's helplines (listed on gov.uk) for questions about your own account.

Related: registering for Self Assessment, late penalties, can't pay your bill?, tax on Vinted, tax on eBay.