Yes, Facebook Marketplace is required to report seller information to HMRC under new rules implemented on 1 January 2024, designed to capture income from "side hustles". Platforms must report details of users who sell over 30 items or earn over roughly €2,000 (approx. £1,700) annually. This aims to ensure tax compliance on profit-making sales.
Do I have to pay tax if I sell on Facebook marketplace?
If you've got a side hustle that means you're trading and making money through online platforms, like eBay, Etsy, Facebook Marketplace or Vinted, you'll need to pay tax if you earn over a certain amount.
HMRC has stated that it only uses the AI tools within Connect to look at social media accounts as part of criminal investigations into tax fraud and not as part of its day-to-day activity for regular taxpayers.
Generally, only business sellers trading for profit might need to pay tax. If you're selling unwanted personal possessions, such as used clothes, an old mobile phone or unwanted furniture, it's very unlikely you will have to pay income tax.
If you're just selling unwanted personal belongings from time to time like old toys and clothes, whether it's online or in person, you don't usually need to tell HMRC.
How HMRC Taxes Facebook Marketplace Sales in the UK 2025-26 | Pro Tax Accountant
What are red flags to HMRC?
HMRC gets a tip-off
The most common reasons are: Unhappy or jealous acquaintances who may suspect dubious activity. The existence of a cash-only policy at your business. Living a lifestyle beyond your apparent means.
The HMRC 4-year rule generally means you have four years from the end of the relevant tax year to claim a refund for overpaid tax or for HMRC to issue a discovery assessment for underpaid tax due to a genuine mistake. This limit extends to six years for "careless" errors and 20 years for "deliberate" actions, with longer periods applicable for offshore matters (12 years) or specific non-domicile regimes. The rule applies across most taxes, but timeframes vary depending on the reason for the error.
As of January 31st, 2024, online marketplaces such as eBay, Vinted, Etsy, and Facebook Marketplace are now required to report seller information to HM Revenue and Customs (HMRC).
You could receive fines and/or a prison sentence. Fines vary from £5,000 to an unlimited fine. Prison sentences vary from 6 months to a life sentence. For most serious tax offences, sentences are given up to 7 years, but the Government is currently trying to increase this to 14 years.
Yes, HMRC does check Vinted because digital platforms must report seller information to HM Revenue & Customs if you hit certain thresholds (30+ sales or €2,000/£1,700+ in earnings per calendar year). This reporting doesn't automatically mean you owe tax, as selling personal items for less than you paid isn't taxed, but it gives HMRC visibility and you still need to submit a form if you meet the criteria, helping them identify potential trading income.
This is a very popular misconception - the reality is that any online or offline selling activity in which the main motive is to make a profit is deemed by the IRS to be a business - this applies no matter how much you are making in revenue.
You know HMRC is investigating you when you receive an official, formal letter or email (often a "brown envelope") stating they've started a compliance check or inquiry, specifying the tax/period and requesting documents like bank statements or records, though sometimes it starts subtly with a request for info on a property or specific return item before escalating. For serious fraud, you might face unannounced raids, interviews under caution (Code of Practice 9/8), or arrest, but usually, it's the written notification that signals a formal investigation.
Yes, you can gift your son £100k, but it's a large sum that triggers Inheritance Tax (IHT) rules in the UK; it becomes a "Potentially Exempt Transfer" (PET) that's fully tax-free if you live for seven years after giving it, but may face IHT if you die within that period, with potential taper relief or a 40% charge depending on the timing. You can use annual exemptions (£3k/£6k) and wedding gifts (£5k) for smaller tax-free amounts, but the £100k is a large gift requiring careful planning to avoid future tax issues for your son, especially regarding income or gains from the money.
What are the chances of being investigated by HMRC?
The chances of being investigated by HMRC are generally low for compliant taxpayers, with only about 7% of investigations being random; most stem from anomalies like inconsistent income/expenses, high-risk industries (cash, self-employed), late filings, or large claims, identified through data analysis, though large businesses face higher scrutiny, and recent trends show increased enforcement. While random checks happen, keeping accurate records and explaining discrepancies significantly reduces risk, but some individuals are simply unlucky.
During the investigation, a team from HMRC will audit your accounts and ask you a number of questions. They might ask to visit you in person at your home, business address or at your accountant's office.
Although there is no time limit for debt recovery, HMRC can't randomly investigate through decades worth of tax returns for any company on a whim. They need to have a genuine reason for investigating, and they must begin an enquiry no more than 12 months after the date a tax return was filed.
HMRC's new rules for online sellers aren't a new tax but require digital platforms (like eBay, Vinted, Airbnb) to report seller data to HMRC from 2024 onwards if you hit thresholds: 30+ transactions or €2,000 (approx. £1,700) in a year, reporting due Jan 31st each year (2025 for 2024 data). This doesn't change tax rules for casual sellers of unwanted items (no tax if below £1,000 trading income), but actual traders (buying to sell for profit) still need to register for Self-Assessment and declare income above the £1,000 allowance.
What happens if I sell more than 30 items on Vinted?
If you sell over 30 items or earn £1,700 (approx. €2,000) on Vinted in a year, the platform will share your details (name, address, NI number) with HMRC for the UK, but this doesn't automatically mean you owe tax; it's to identify potential trading businesses, not casual selling of personal items, so you might get a letter asking for clarification, and you'll need to respond if you've been making a profit.
