Do you need to pay tax on your online side hustle?
This very much depends on whether you’re trading or not.
If you’re making a profit from selling on an online selling platform, then this is almost certainly trading.
A couple of examples…
You’re importing products from India and listing them online at an increased price, on an auction site such as eBay. This is trading.
You’re selling products that you make yourself, such as clothing or artwork, and selling then on a site like Etsy or Not on the High Street. This is trading.
If this sounds like your side hustle, your profits exceeding £1,000 are taxable.
But if you’re selling unwanted, second-hand clothes or products online, you’re unlikely to be making a profit so this probably won’t count as trading.
What does this mean for your tax?
These rules apply to those who are trading as their main income or as a ‘side hustle’.
You might need to pay income tax and NI on your profits. It depends on what your profits are.
If your profits are more than £1,000, you have to report your income and related expenses to HMRC using a self-assessment tax return.
There may be no tax to pay if your profits come in below the personal allowance threshold of £12,570/year. But even in this case, you’re required to fill in the self-assessment form anyway.
If you’re unsure whether you should be paying tax on your online side hustle, our experts can bring some clarity.