You've had a letter from HMRC about online selling. Now what?
First, don't panic. A letter like this is almost always an automated nudge, not a fine, a penalty, or an investigation. HMRC now gets sales data from platforms like eBay and Vinted, and it sends these letters out in bulk to people whose figures it wants to check. Plenty of people who get one turn out to owe nothing. Here's how to work out where you stand, and what to do next.
What this letter actually is
It's what HMRC calls a "one to many" letter, sometimes called a nudge letter. It's generated automatically and sent to lots of people at once, usually because the sales data a platform reported doesn't obviously line up with what HMRC has on your tax record. It is not an accusation, a fine, or a tax investigation. In plain terms, it's HMRC saying: our data suggests you might have income to declare, so please check and let us know.
What to do, step by step
- Work out whether you actually owe anythingMost people who get these letters owe nothing. If you were only selling your own used belongings, clothes, old gadgets, things from around the house, that isn't taxable income, however much it came to. If you were trading, meaning buying or making things to sell on for profit, and your sales topped the £1,000 trading allowance, then there may be tax to sort out. The free checker walks you through it in a couple of minutes.
- Reply by the date on the letter, even if you owe nothingThis is the important bit. Respond by the date given, which is usually around 30 days, even if your answer is "I owe nothing." Ignoring it is the one thing not to do, because silence can turn a simple nudge into something more formal.
- Be careful with the "Certificate of Tax Position"Some of these letters come with a certificate to sign and return. You're not legally required to sign that particular form, and it has no fixed deadline, but you should still respond to HMRC one way or another, by letter or phone if you prefer. Take care before signing it if you're at all unsure, because a certificate that later turns out to be wrong can carry serious consequences. If in doubt, it's worth having an accountant glance at it first.
If you did have income you should have declared
If, going through it, you realise you did have trading income you should have told HMRC about in past years, you can put it right through HMRC's Digital Disclosure Service. You tell HMRC you want to disclose, then you generally have 90 days to work out and pay what's owed.
Two things are worth knowing. Coming forward keeps penalties lower, and disclosing because a letter prompted you carries higher minimum penalties than coming forward off your own back, so it's better to act now than wait. And how many years you need to cover depends on the situation: roughly four years if you took reasonable care, six if it was careless, and up to twenty if it was deliberate. If it's more than a small amount, an accountant is worth the money here.
What not to do
Three quick don'ts. Don't ignore the letter. Don't panic-sign a certificate you're unsure about. And don't assume the letter means you're being fined, because for most people it doesn't.
Not sure whether you owe anything?
Soldly gives you a straight verdict in two minutes: were you trading, do you need to register, and roughly what (if anything) you'd owe. No sign-up, nothing saved.
Check where I stand →Common questions
Is an HMRC nudge letter a fine or an investigation?
No. It's an automated "one to many" letter sent in bulk, based on sales data HMRC now gets from selling platforms. It's a prompt to check your position, not a penalty or a formal investigation.
Do I have to reply to an HMRC letter about online selling?
Yes, you should reply by the date on the letter, usually around 30 days, even if you owe nothing. Ignoring it can lead to more formal action.
Do I have to sign the Certificate of Tax Position?
You're not legally obliged to sign that specific form, and it has no fixed deadline, but you should still respond to HMRC by letter or phone. Be careful signing it if you're unsure, because a false certificate carries serious consequences. Consider getting an accountant to check it first.
I only sold my own old stuff. Do I owe anything?
Almost certainly not. Selling your own used possessions isn't taxable, no matter how much it came to. You can reply to HMRC and say that's what you were doing. The one exception is a single item sold for over £6,000.
What if I did owe tax I didn't declare?
You can put it right through HMRC's Digital Disclosure Service. Coming forward keeps penalties lower than waiting to be chased. How far back you need to go depends on the circumstances, from around four years up to twenty for deliberate cases. An accountant can help if it's more than a small amount.