HMRC Flags Tax Risks for Festive Traders
HM Revenue and Customs (HMRC) has issued a warning to Christmas market sellers, urging them to check whether they owe more tax than they realise on festive trading income. The alert targets stallholders, crafters and seasonal traders who may assume short-term sales fall outside the tax system.
HMRC says many people underestimate their tax liability during the festive season, particularly those running side hustles alongside regular employment.
£1,000 Trading Allowance Explained
Under current rules, anyone earning more than £1,000 per tax year from trading activities must register for Self Assessment as a sole trader. HMRC stressed that this limit applies to combined income across all side hustles, not each activity separately.
For example, someone earning £600 from selling handmade decorations and £500 from online content creation would exceed the threshold and be required to register, even if each activity individually falls below £1,000.
Christmas Sales Fall Into the 2025–26 Tax Year
HMRC confirmed that income from Christmas market trading this winter will fall into the 2025–26 tax year, with the deadline for filing a Self Assessment return set for January 31, 2027.
While that deadline may seem distant, HMRC encourages sellers to act early. Late registration or missed filings can lead to penalties and interest charges, even if little or no tax is ultimately owed.
Not All Online Selling Counts as Trading
HMRC clarified that people selling unwanted personal items on platforms such as Vinted or Depop usually do not need to register as sole traders. However, anyone buying, making or upcycling goods with the intention of making a profit is classed as trading.
That distinction is crucial for festive sellers who purchase materials or stock specifically to sell at Christmas markets or online during the season.
Registering Does Not Automatically Mean Paying More Tax
HMRC emphasised that registering for Self Assessment does not necessarily mean paying extra tax. Individuals still benefit from the £12,570 personal allowance, meaning tax is only due if total income exceeds that level.
Traders may also deduct allowable expenses linked to their side hustle, including materials, website costs, packaging and stationery, which can significantly reduce any tax bill.
Penalties for Failing to Register or Declare Income
Sellers who exceed the £1,000 threshold and fail to register risk receiving an unexpected tax bill along with penalties. Late filing can trigger an automatic £100 fine, with additional daily charges if delays continue.
HMRC warned that problems often arise when people assume short-term or seasonal income is exempt, only to face enforcement action later.
HMRC and Market Bodies Urge Early Action
Kevin Hubbard, HMRC’s Director of Individuals and Small Business Compliance, said:
“Whether you're making Christmas decorations, selling upcycled furniture, or running a seasonal market stall, it's important to understand when your festive side hustle becomes taxable trading.”
Graham Wilson OBE, Deputy Chief Executive of the National Association of British Markets, added that markets play a vital role in Christmas celebrations and urged first-time traders to familiarise themselves with their tax obligations to avoid problems after the festive period.
