Explained: The New Fashion Reseller “Side Hustler” Tax

With the new year, comes a new tax…HMRC is cracking down on Depop, Vinted and Ebay ‘side hustlers’ - So what does this mean for secondhand shopping? We investigate…

As per the GOV.UK, Depop, Vinted, Etsy and eBay will be amongst the digital platforms required to automatically share data with HMRC, meaning certain platform users will be taxed on their earnings from January 2024. It seems this new tax has been introduced in an attempt to crack down on ‘side hustlers’ who have been making an additional income and until now, have kept that secondary sum from the taxman.

So for those of us who love a good thrift or resale find, what can we expect from our favourite preloved platforms and will we see an immediate change? Well, the good news is not everyone who uses these platforms will be affected, well not initially anyway. It turns out the group who will feel the most immediate effect will be established sellers, categorised by those who make more than £1,000 in sales per year across digital platforms that “facilitate the provision of services or the sale of goods by UK or other taxpayers. Digital platforms include apps and websites which facilitate the provision of goods and services such as the provision of taxi and private hire services, food delivery services, freelance work and the letting of short-term accommodation.

A heads up... Those who do fall into the over £1,000 threshold category whether that be as a result of renting a room or reselling clothes, will be required to register themselves as self-employed and file a self-assessment tax return in time for the deadline in January 2025. While not all data will be shared initially, super active sellers, classified as those making more than £1,700 per year, will be amongst the first whose data will be shared and reported on. So although sellers making over the threshold of £1,000 could go under the radar to start with, it will be the seller’s responsibility to disclose their earnings to avoid fines for tax evasion in the future. For advice on filing self-assessment tax returns, you can find help here.

The new tax: friend or foe?

Looking at the bigger picture, there may be some of the long-term implications to consider. The first one that springs to mind is a possible rise in prices, an understandably concerning thought as we collectively navigate the cost of living crisis. Although only a small amount of sellers will be taxed on their earnings, the question is whether this small change will have a big effect later down the line. Will we start seeing established sellers upping their prices to cover these taxes? And could this potentially trickle across these platforms resulting in a hick in prices across the board? This may be particularly prominent on apps such as Vestiaire Collective when items are prominently designer and of higher value. We all know that sustainable fashion brands can often be more expensive and less accessible than cheap, fast fashion brands so it’s a shame to think about our favourite preloved platforms potentially falling into this category.
And it's not just about the money. What about the message it sends? It’s hard not to think, shouldn't we be encouraging more people to hop on the sustainable shopping train rather than throwing obstacles in the way?

“For many of us, these platforms are like treasure chests filled with pre-loved gems, offering a more sustainable and budget-friendly alternative to the fast fashion frenzy. But now, with this tax in play, it feels like a barrier to those trying to make more mindful purchases.”

So what can we do?

Well, we have a couple of options here…firstly, we can view this as an opportunity to make the most of our closets with the help of apps like Whering where you can create and plan outfits with what’s in your closet or even swap for free with apps like Nuw Wardrobe. Another option we have is to be more savvy across these digital platforms. We can do this by favouring cash-only services such as Facebook Marketplace and Gumtree. In the coming months and years, we expect to see more clothes re-sellers popping up on apps like this in the wake of the new tax. And for those resale shoppers who favour digital platforms like Vestiaire Collective that specialise in designer and higher value purchases, a piece of advice would be to favour international sellers. While shipping costs may need to be considered, they are often minimal and as this tax only applies to the UK we shouldn’t see a hike in prices from international sellers.

“Another thing we can do is flip the mindset and look at the positives. Despite the potential cost implications, the new tax and the potential barrier to selling secondhand clothes could act as yet another reminder for us to shop more mindfully and to only buy things we love and need.”

Extending the lives of our clothes is a huge step towards reducing society’s insatiable desire for consumption but what we are seeing more and more, are fast fashion brands like H&M and Zara flooding these digital platforms. The ease at which we can resell our clothes could be subconsciously influencing our approach to purchases by alleviating our guilt. While purchasing fast fashion brands through these digital platforms is much more ethical and environmentally conscious than purchasing them new, it does still keep these brands at the forefront of fashion. The real aim as consumers is to reduce demand for fast fashion brands so could this be a step in that journey? I guess we’ll have to wait and see.

Looking to the future

Now, we can all appreciate that taxes must be paid where they are due, but it does make you wonder – what's next? Will they be coming for rental platforms like HURR and By Rotation next? I guess in the meantime, all we can do as buyers is continue to support these sustainable digital platforms the best way we know how while also making a conscious effort to reduce consumption across the board. And for those super successful sellers, I guess it’s time to adult and start looking at some self-assessment forms….resale girlies, you’ve got this.