Side hustle boost: Vinted and eBay sellers see tax-free trading allowance trebled to £3,000

The amount of money people can earn in 'side hustle' jobs before paying tax will treble from £1,000 to £3,000 in the next tax year, the Chancellor revealed in the Budget.In the past decade, there has been an explosion in Britons taking on extra work to top-up incomes, from dog walking to online tutoring.One of the main side hustles is flipping items on online platforms such as Depop, eBay and Vinted for a profit.Around 53 per cent of adults under 25 earn additional income through a side hustle, data claims.John Healey announced in the Budget that the boost in the trading allowance will 'support people starting a business'.Selling your own unwanted belongings on platforms such as Vinted or eBay doesn't automatically count as trading.However, there's a distinction between clearing out your wardrobe and regularly buying items specifically to resell for profit. Vinted users and other side hustle earners are set to get a tax-free allowance boostAs a selling and buying platform Vinted has boomed in recent years, with millions of users – while eBay has been a staple for decades. But many sellers have failed to realise when they need to pay tax.Rules came into force last year requiring platforms to inform HMRC about their sellers and how much money they made. HMRC now receives data about every seller who made 30 sales or £1,700 on any platform in the past year.It means the taxman now holds details of 2.6million people making money from a side hustle in selling goods online, nearly six times the 450,000 people it had on its list a year ago, according to figures from accountancy firm Lubbock Fine.Currently, if you make more than £1,000 a year on the side, it's your responsibility to tell HMRC by doing a self assessment.From April 6, 2027, you won't have to pay income tax or National Insurance on the first £3,000 of total gross income.Anyone earning over £3,000 can still deduct the allowance from their total income and pay tax on the remaining balance. Or they can deduct their actual allowable business expenses if they exceed the limit.If you have a side hustle and currently earn less than £3,000 for the tax year, the income will be fully covered by the allowance meaning you owe no tax and generally do not need to file a self assessment tax return.Earnings from different activities all count towards the same allowance, meaning smaller amounts of income can quickly add up.Data by HMRC shows just one in four knew about HMRC's £1,000 trading allowance threshold that comes with earning on the side.Generally, Britons are advised to keep full and accurate records of all sales, income and business expenses, even if you use a tax agent or accountant as you'll need this information to complete tax returns properly.If the Government finds you did not register for Self Assessment and pay tax on your side hustle, you may be given a penalty. 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You might also get penalties if you don't pay your tax on time.Mr Healey said: 'We are tripling the trading allowance from £1,000 to £3,000 to support people starting a business; improving venture capital schemes and simplifying access to R&D tax reliefs to help growing firms attract investment and innovate; and we are expanding tax-advantaged employee share schemes to help ambitious businesses recruit and retain talent.'Andy Wood, tax expert at Tax Barrister UK commented: 'The increase in the trading allowance from £1,000 to £3,000 will be welcome news for millions of people earning extra money through side hustles, whether that's selling products online, freelancing or offering services such as tutoring and dog walking.'However, there are a few important things people need to understand before assuming they can earn £3,000 tax-free.'Firstly, the new allowance won't come into effect until 6 April 2027, meaning the existing £1,000 limit still applies for the current tax year.'Secondly, the £3,000 threshold relates to total trading income before expenses, not profit. 'Someone earning £2,000 from selling products online and another £1,500 from freelance work would exceed the allowance, even if their actual profit was considerably lower.'Importantly, selling your own unwanted belongings on platforms such as Vinted or eBay doesn't automatically count as trading. 'There's a distinction between clearing out your wardrobe and regularly buying items specifically to resell for profit.'People should also remember that online platforms can share information with HMRC, so keeping accurate records of earnings remains important, even if they fall below the new threshold.'It comes as the Chancellor stated he would make online marketplaces responsible for collecting value added tax (VAT) owed by retailers selling on their platforms from October 2027.He said: 'I ​will strengthen the requirements for online ​marketplaces so that sellers cannot avoid paying ⁠VAT when they sell online.'The change means online marketplaces like Amazon, eBay, Temu, Shein and Alibaba will become responsible for collecting the VAT which is charged on sales by sellers on their sites.It aims to tackle VAT evasion and support competition by helping ensure businesses that pay the tax they owe are not undercut by those that do not. 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