New £3,000 side hustle tax rules: do you pay tax on Vinted and eBay sales?

People earning extra money from side hustles could soon be able to keep more of what they make, after the government confirmed plans to triple the tax-free trading allowance from £1,000 to £3,000.

The change was announced in the Autumn Budget on 28 October 2026 and will take effect from 6 April 2027, potentially benefiting up to 1.4 million people who earn money from activities such as selling online, dog walking, tutoring and freelance work.

It could also mean less paperwork, with the threshold for reporting trading income through Self Assessment increasing to £3,000.

But what does this mean if you sell clothes on Vinted, make money on eBay or have a second job? And will HMRC still be checking what you earn?

Here's what you need to know about the new side hustle tax rules, who qualifies and when you might need to pay tax.

How much can you earn from a side hustle before paying tax?

From 6 April 2027, you will be able to earn up to £3,000 a year in qualifying trading income without paying income tax on it, provided you're eligible for the trading allowance.

Until then, the trading allowance remains £1,000 for the 2026/27 tax year.

The allowance covers income from activities such as:

• Selling goods you've bought or made to sell for profit, including on eBay, Vinted and Etsy.

• Freelance work, such as writing, design or photography.

• Dog walking, pet sitting and babysitting.

• Tutoring, cleaning, gardening and other casual services.

• Certain income from creating online content.

The £3,000 allowance applies to your total qualifying trading income across all your activities, not £3,000 for each individual side hustle.

It's also important to understand that the threshold generally applies to your gross income, which is the amount you receive before deducting business expenses, rather than the profit you've made.

For example, if you sell £2,500 worth of handmade jewellery but spend £1,000 on materials, your gross trading income is still £2,500.

If you're eligible to use the new allowance, that income could be tax-free from April 2027. However, if your expenses are particularly high, claiming your actual allowable business expenses instead may work out better.

Do you have to pay tax on Vinted sales?

You usually won't have to pay income tax if you're simply selling your own unwanted clothes or possessions on Vinted, regardless of whether your total sales exceed £3,000.

This is because selling personal belongings is generally different from running a business.

For example, if you've cleared out your wardrobe and made £1,500 selling clothes, shoes and accessories you originally bought for yourself, HMRC wouldn't normally treat that as trading income.

The same principle applies if you have a particularly successful clear-out and sell several thousand pounds' worth of your own belongings.

However, if you're regularly buying clothes from charity shops, car boot sales or other sellers with the intention of reselling them for profit, HMRC may consider that trading.

In that situation, the trading allowance becomes relevant, and you'll need to consider your total sales income across the tax year.

There are separate Capital Gains Tax rules for some valuable possessions sold for more than £6,000, but these are unlikely to affect an ordinary wardrobe clear-out.

Do you have to pay tax on eBay sales?

The rules for eBay are broadly the same as Vinted. Selling your own second-hand belongings doesn't usually create an income tax bill, but buying or making products to sell for profit can count as trading.

For example:

• Selling an old games console you no longer use would normally be treated as selling a personal possession.

• Selling furniture you've replaced at home wouldn't usually count as trading.

• Buying discounted electronics specifically to resell at a profit could count as trading.

• Regularly buying second-hand furniture, restoring it and selling it could also count as trading.

The key question is whether you're simply selling things you already own or carrying out an activity with the intention of making money.

HMRC looks at the circumstances of the activity, so the number of sales alone doesn't determine whether you're trading.

Do you have to pay tax on Etsy sales?

If you're making products specifically to sell on Etsy, such as jewellery, candles, prints or personalised gifts, HMRC may treat this as trading income.

The same applies if you sell your products through Instagram, Facebook Marketplace or your own website.

From April 2027, the first £3,000 of qualifying gross trading income could be covered by the new allowance.

However, you won't get a separate allowance for Etsy and another one for selling on eBay.

If you earn £1,800 from handmade products on Etsy and another £1,500 buying and reselling items on eBay, your combined trading income is £3,300.

That would put you above the new £3,000 threshold, meaning you'd normally need to check your reporting obligations and work out whether you have any taxable profits.

Does Vinted or eBay report your sales to HMRC?

Yes, online platforms including Vinted and eBay can be required to share information about sellers with HMRC, and the new £3,000 trading allowance won't change those platform reporting rules.

Under the existing rules, platforms generally don't have to report someone selling goods if they make fewer than 30 sales and receive no more than €2,000, approximately £1,700, in a calendar year.

Exceeding either limit can mean a platform needs to report your details.

However, there are two important things to understand.

First, these are reporting thresholds for the platforms, not the amount you can earn tax-free.

Second, being reported to HMRC doesn't automatically mean you owe tax.

Someone selling £2,500 worth of their own unwanted clothes could have their information shared with HMRC without having any income tax to pay on those sales.

Meanwhile, someone who makes £1,200 buying and reselling items for profit could have tax reporting responsibilities under the current rules, even if their platform hasn't reported them.

The difference comes down to what you're doing, rather than simply how much money has passed through your Vinted or eBay account.

What is changing with the HMRC trading allowance in April 2027?

The government is making two important changes from 6 April 2027.

1. The tax-free trading allowance increases from £1,000 to £3,000

People who qualify for the allowance will be able to receive up to £3,000 of trading and certain miscellaneous income without paying income tax on it.

For people already earning more than £1,000 from a small side business, this could reduce their tax bill.

2. The Self Assessment trading income reporting threshold increases to £3,000

People with qualifying gross trading income of £3,000 or less will generally no longer need to complete a Self Assessment tax return solely to declare that income, provided no other reporting requirement applies.

This could be particularly helpful for people who occasionally earn a few hundred pounds from freelance work or casual services and don't run a full-time business.

The Treasury estimates that 400,000 people could see their tax bills fall by an average of £380, while another 100,000 could stop needing to report their trading income to HMRC.

The government expects up to 1.4 million people to benefit from the changes overall.

How much tax could you save with the new £3,000 side hustle allowance?

If you already pay basic-rate income tax through your main job, increasing the trading allowance could mean keeping more of the money you earn from a small side business.

Let's say you earn £2,400 a year from dog walking alongside your regular job.

Assuming you're eligible for the allowance, have no deductible expenses you're claiming instead, and pay income tax at 20% on your additional taxable income:

Before April 2027:

• Annual side hustle income: £2,400

• Trading allowance: £1,000

• Amount subject to income tax: £1,400

• Income tax at 20%: £280

From April 2027:

• Annual side hustle income: £2,400

• Trading allowance: £3,000

• Amount subject to income tax: £0

• Income tax: £0

In this example, you'd save £280 in income tax over a year.

That's money that could go towards household bills, savings or simply giving your monthly budget a bit more breathing space.

Your actual saving depends on your circumstances, including your other income, tax rate, whether you qualify for the allowance and whether claiming business expenses would be more beneficial.

Do you need to register with HMRC if you earn less than £3,000?

From 6 April 2027, people earning up to £3,000 in qualifying gross trading income will generally not need to register for Self Assessment solely because of that income.

However, you may still need to submit a tax return for another reason, and there are restrictions on who can use the trading allowance.

The new rules do not apply until April 2027.

For the current 2026/27 tax year, the £1,000 trading allowance still applies. If your gross trading income exceeds that amount, you should check whether you need to register for Self Assessment.

If you need to register for the first time for income earned in the 2026/27 tax year, the usual deadline to notify HMRC is 5 October 2027.

You can use HMRC's free online tool to check whether your additional income needs to be declared.

Does the £3,000 trading allowance apply to a second job?

It depends on whether you're employed or self-employed.

If you work a second job where your employer pays you through PAYE, such as working weekend shifts in a supermarket or pub, the trading allowance doesn't apply to those wages.

Your income tax is generally calculated across your taxable earnings, and having two employers doesn't automatically give you two separate personal allowances.

However, if you're doing qualifying self-employed work alongside your main job, the trading allowance may apply.

That could include freelance writing, tutoring, cleaning, pet sitting or carrying out occasional paid jobs independently.

You can have a regular employed job and still qualify for the trading allowance on separate eligible income.

Does side hustle income affect Universal Credit?

Yes. Even if your side hustle income is tax-free, it can still affect your Universal Credit payments.

The trading allowance is an income tax rule. It doesn't mean the Department for Work and Pensions will ignore what you've earned.

If you're receiving Universal Credit and are self-employed, you'll normally need to report your business income and expenses every month, even if your earnings fall below the HMRC trading allowance.

For example, if you earn £200 from dog walking during the month, you may have no income tax to pay, but you'll still need to report that business income for Universal Credit.

The amount your payment changes depends on your circumstances, including your total earnings and any relevant work allowance.

If you're simply selling unwanted personal belongings, Universal Credit normally treats the proceeds as capital rather than trading income. This means the money can count towards your savings and capital limits.

It's worth checking how any additional income could affect your benefits before relying on a particular amount of extra money each month.

When does the new £3,000 side hustle tax allowance start?

The increase takes effect on 6 April 2027, the first day of the 2027/28 tax year.

It won't apply retrospectively to trading income earned during the current 2026/27 tax year.

If you already have a side hustle, it's sensible to keep records of your sales, earnings and expenses so you can work out which rules apply to each tax year.

You should also keep track of income across different platforms. If you sell on eBay, Etsy and Vinted as part of trading activities, HMRC will consider your combined qualifying trading income rather than each account separately.