Understand the tax on your side income

Use this guide if you earn extra money outside your main job – selling online, doing odd jobs, renting out space or offering a service – and are not sure what HMRC expects. Have a rough list of what you earned and spent in the last tax year (6 April to 5 April) and any statements from the platforms you use. This is general information, not personal tax advice; for complicated situations speak to an accountant or the free charity TaxAid or Tax Help for Older People.

Step by step

1. Decide if you are selling or trading

   Selling your own unwanted belongings – old clothes, a pram, furniture – is usually not trading and normally not taxable income. It becomes trading when you buy or make things in order to sell them at a profit, or sell a service, and HMRC judges this using the 'badges of trade': a profit motive, how often you sell, whether you bought items to resell, whether you improved or repackaged them, how you sell (adverts, a shop name, a listing schedule) and how quickly you resell after buying. Use this rule of thumb: if you would buy the item again tomorrow purely because you could sell it on, you are probably trading. Write a one-line description of each income stream you have and mark it 'personal item', 'trading' or 'property/land', because each one is treated differently. One exception: selling a single valuable personal item, such as jewellery, art or a collectable, for a large sum can bring Capital Gains Tax – check the current rules for personal possessions on GOV.UK.