eBay, Vinted, Depop, Etsy join forces to demand tax change for sellers

If your side hustle is reselling old clothes, you’ll want to pay attention to the upcoming Autumn Budget. 

eBay, along with a coalition of marketplaces including Vinted, Etsy, and Depop, and business groups such as the Federation of Small Businesses, techUK, and Enterprise Nation, are campaigning for the Trading Allowance to be increased from £1,000 to £3,000.

The Trading Allowance gives individuals tax relief on income generated through small sales or freelance work. However, it has remained fixed at £1,000 since 2017, rather than rising in line with inflation. Therefore, sellers and marketplaces are keenly awaiting a review of the allowance in the Autumn Budget on 26th November.

What is the UK Trading Allowance?

The current UK Trading Allowance is set at £1,000, meaning self-employed workers can deduct that amount from taxable income. In theory, this means that you aren’t taxed on smaller earnings from side hustle income streams, like selling clothes online. 

But since the allowance has remained at £1,000 since its introduction in 2017, rising costs and inflation have diminished its value significantly. 

Like many, lower earners and self-employed workers have been struggling to stay afloat amid cost of living pressures. So much so that there was a petition to raise the Personal Allowance from £12,570 to £20,000 — but that’s a different threshold to the Trading Allowance. 

The current campaign to raise the Trading Allowance was initiated by eBay. Backed by other marketplaces and business groups, eBay is pushing the government to triple the allowance from £1,000 to £3,000.

This would give sellers on platforms like eBay, Depop, Etsy and Vinted profits that feel more in proportion to their earnings, rather than squeezed by outdated thresholds. But at £3,000, the allowance isn’t a big bonus; it’s just a fairer reflection of today’s economy, catching up with years of inflation and rising costs.

How likely is an increase in the Trading Allowance?

Businesses across the UK are anxiously awaiting November’s Autumn Budget, with tax rises widely expected.

For SMEs, possible measures on the table include investment in infrastructure, funding for digital transformation, energy cost relief, and long-overdue reform of business rates. Other anticipated announcements might involve an increase in the National Minimum Wage, new protections under the Employment Rights Bill, and a rise in Capital Gains Tax.

But for side hustlers on eBay, Vinted, Depop and Etsy, the outlook is less rosy. With income tax thresholds frozen for years, the Trading Allowance is unlikely to be touched this year, despite calls to raise it in line with inflation.

Side hustle getting harder

More young people are starting side hustles, drawn by the flexibility, creativity, and extra income they can generate. And for many, these small-scale projects can turn into running a fully-fledged business, such as an online clothes shop or selling handmade crafts.

That said, new guidance from HMRC dubbed the Side Hustle “Tax” at the start of 2024 has made it harder for side hustlers to keep hold of their earnings. HMRC indicated that those who make fewer than 30 sales a year, or who earn less than €2,000 (around £1,700) per year from sales, do not have to file a tax return — but others would need to.

With this in mind, eBay’s campaign argues that raising the Trading Allowance to £3,000 would not be a luxury; it would signal that the government values small-scale work and is serious about fostering an entrepreneurial culture in the UK.