Christmas Side Hustles: When Does HMRC Tax Your Income?

Turning Festive Fun into Extra Income

As Christmas approaches, many people look to earn extra money through seasonal activities. From selling handmade cards and gifts at Christmas markets to listing items on platforms like eBay or Etsy, festive trading is increasingly popular. Influencers and content creators may also receive free products or services in return for online promotion.

While these activities may feel like a hobby, HMRC may view them differently—particularly if there is an intention to make a profit.

HMRC’s ‘Help for Hustles’ Campaign

HMRC has made its position clear through its ‘Help for Hustles’ campaign. If you earn money from selling goods or services—such as crafts, tutoring, dog walking, or online content—with the aim of making a profit, it may count as a business for tax purposes.

Anyone earning more than £1,000 in a tax year from these activities (known as the trading allowance) must inform HMRC. The campaign focuses especially on seasonal sellers and highlights the difference between:

• Selling personal, unwanted items (usually not taxable), and

• Trading activities carried out for profit (which may be taxable)

HMRC promotes this guidance online and also sends letters to individuals it believes may be trading, including those identified through social media activity.

How Online Platforms Share Data

In December 2024, HMRC confirmed that there were no new taxes for online sellers but announced increased data sharing by platforms such as eBay, Etsy, Amazon, Airbnb, and Deliveroo.

These platforms are required to report seller information—including name, address, date of birth, National Insurance number, number of transactions, and total sales—to HMRC if a seller:

• Completes 30 or more transactions in a year, or

• Earns more than €2,000 (around £1,700) in gross sales

Sellers must also receive a copy of the data shared with HMRC.

How HMRC Decides If You’re Trading

HMRC uses a set of criteria known as the ‘badges of trade’ to decide whether an activity counts as a trade. Only one badge needs to apply for HMRC to treat the activity as taxable.

The nine badges include:

• Intention to make a profit

• Frequency of transactions

• Nature of the items sold

• Repetition of similar transactions

• Changes made to items before sale

• How the items are sold

• How the activity is funded

• Time between purchase and sale

• How the items were acquired

Some badges carry more weight than others, depending on individual circumstances.

Understanding the Trading Allowance

Tax is charged on profits, meaning income after allowable expenses. The £1,000 trading allowance can be used to reduce taxable income from side hustles.

• If gross income is below £1,000, it does not need to be reported.

• If income exceeds £1,000, the allowance can be deducted, and tax (and National Insurance, where applicable) paid on the balance.

Alternatively, sellers can claim actual business expenses instead of the allowance. This may be more beneficial if expenses are high or if the activity results in a loss, which could be offset against other income.

Tax Treatment of Non-Cash Benefits

Influencers and content creators often receive free products or services in exchange for reviews or promotions. These non-cash benefits are taxable and must be valued and included as trading income, alongside any cash payments received.

Practical Advice

HMRC offers an online checker to help individuals understand whether they need to report additional income. The tool also provides guidance on managing the tax implications of side hustles and seasonal trading.

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