HMRC letter about your Vinted, eBay or side-hustle income? What a 'nudge letter' means
A 'nudge letter' means HMRC has received data suggesting you may have undeclared income. Since 2024, platforms like Vinted, eBay, Etsy, Depop and Airbnb report seller information to HMRC directly. It is not a penalty or an accusation, but it must not be ignored: you typically need to check your position and respond, either confirming no tax is due (many casual sellers owe nothing thanks to the £1,000 trading allowance) or making a disclosure.
Written by the team behind Agent Arthur, our HMRC and tax specialist. This guide is general information about UK law, reviewed for accuracy.Why you got this letter
Under international reporting rules adopted in the UK from January 2024, digital platforms must report their sellers' details and income to HMRC, typically once you pass roughly 30 sales or about £1,700 in a year. HMRC cross-checks that data against tax records, and 'nudge letters' go to people where something doesn't match. The volume is huge and growing: reports on millions of UK sellers are now filed each year.
A nudge letter is deliberately not a formal enquiry. It's HMRC saying: we have data, check yourself, and tell us. How you respond determines whether it ends quietly or escalates.
First: do you actually owe anything?
- Selling your own unwanted possessions (clothes, old electronics, the loft clear-out) is generally not taxable, because that's not trading, whatever the letter implies
- The £1,000 trading allowance: if your gross income from casual trading or services was under £1,000 in a tax year, there's usually no tax to pay and often nothing to report
- You may be trading if you buy to resell, make things to sell, or sell frequently and organised like a business. That income above £1,000 needs reporting
- Capital items sold for over £6,000 (rare for side-hustles) have their own rules
How to respond (and how not to)
- Don't ignore it: silence invites a formal compliance check, and penalties are worse once HMRC opens one
- If nothing is due: reply explaining why (personal possessions, under the trading allowance) factually and briefly
- If you should have declared: register for Self Assessment or use HMRC's disclosure route; coming forward before you are chased still earns materially lower penalties than being found
- Keep records: sales lists, what items were, what they cost you. Your reply should be consistent with what the platform reported
- Meet any deadline in the letter, and keep a copy of everything you send
Answer the nudge letter properly, onceArthur drafts your response, whether that's a clear 'nothing is due and here's why' or the first step of a disclosure, factual, consistent with the data HMRC holds, and ready to send.£5 launch price (normally from £19.99)Start my appeal letterCommon questions
Is a nudge letter an investigation?
No. It's a prompt based on data, sent before any formal enquiry. Respond well and most go no further. Ignore it and it can escalate into a compliance check, where penalties and interest are on the table.
I only sell my own old clothes on Vinted: do I owe tax?
Almost certainly not. Selling your own possessions isn't trading. If that's your situation, the right response is a factual reply saying so, not registering for Self Assessment out of fear.
What is the £1,000 trading allowance?
Up to £1,000 of gross trading income per tax year is covered by the allowance, with no tax due and generally no return needed for it. Above £1,000, you need to report (though you can still deduct the allowance instead of expenses).
What if I should have declared and didn't?
Respond via the disclosure route rather than staying silent. Penalties are calculated on behaviour, and prompted-but-cooperative is treated far better than concealment. You'll pay the tax, interest, and a reduced penalty.
The platform's figure looks wrong: what do I do?
Say so in your reply, with your own records. Platform reports are gross and can include refunds, postage or duplicates; HMRC expects you to reconcile, not to accept their number blindly.