As Christmas markets return to high streets and town squares across the U.K., many small traders and hobby sellers are gearing up for their busiest time of the year.
Colourful stalls filled with handmade gifts, festive cards and seasonal decorations are a much-loved part of the holiday season, but HMRC is reminding sellers that it’s not all mince pies and tinsel when it comes to tax.
Indeed, the trading allowance rules state that anyone who earns over £1,000 from side hustles needs to report that to HMRC and pay tax accordingly.
For those trading this Christmas (in the 2025/26 tax year) that tax will be due and payable by 31 January 2027, but for those who started last year (or earlier), you may have to register for self-assessment now and could even be required to file a tax return by 31st January 2026, or in some cases even have historic income to report.
So, what constitutes trading and what doesn’t? What if you are just getting rid of unwanted gifts from last year?
Simply decluttering your home by selling unwanted personal belongings is usually a tax-free activity and you don’t need to report this to HMRC, even where the income exceeds £1,000 per year. However, on some occasions where you sell a single personal item or collection for more than £6,000, you may be liable to pay capital gains tax.
On the other hand, if you sell regularly with the intention of making a profit, or create and manufacture items to sell for profit this can be classed as trading, however, it's not always straightforward.
The £1,000 threshold applies to overall trading income, so sellers need to consider all of their earnings.
For example, someone making £400 from selling Christmas decorations and £800 from promoting their favourite Christmas cake brands online would still need to register with HMRC, as their total exceeds the £1,000 limit.
This Christmas warning forms part of HMRC’s ongoing ‘Help for Hustles’ campaign, which is designed to support smaller sellers and side hustlers with free online advice, guides, and tools to help calculate tax liabilities.
The campaign aims to help people understand the point at which a fun festive project becomes a taxable trading activity, and to help them prevent unexpected bills later down the line.
Online sellers this year should also make sure to stay alert, as many online selling platforms such as Vinted, eBay, and Facebook Marketplace are now obliged by HMRC to share sales data with them.
It appears that anyone who is paid over approximately £1,700 annually or makes 30 or more sales on these sites will have their information reported to HMRC automatically. So, if this is you, you could be on HMRC’s radar.
Keeping detailed records of sales and income throughout the year is the best way to avoid any issues when the time comes to file your tax return.
For many people, selling at Christmas markets or online platforms is an enjoyable hobby and a way to make some extra festive income. But as these activities become more popular, the line between casual selling and running a small business can easily become a blur. With the Christmas season now in full swing, sellers are being urged to keep receipts, track income carefully, and check they are staying within the rules.
The Christmas season should be full of festive cheer and not unexpected tax liabilities, so, if you are in any doubt about whether your income is taxable, or if you think you might have a current or historic filing requirement, please do get in touch.
