If you sell through an online marketplace, the platform has been reporting your sales to HMRC since January 2024, with the first reports sent by 31 January 2025. That gives HMRC a ready made way to compare your platform income with your tax return. Tax investigation insurance pays your accountant’s fees if HMRC opens a check, up to £100,000 with Solar Protect and with no excess.
What does the platform report about online sellers?
Under the digital platform reporting rules, marketplaces report your name, address, date of birth, National Insurance number, the total paid to you each quarter, the number of sales, and the fees and commissions they took. Sellers making fewer than 30 sales of goods and receiving 2,000 euros or less (about £1,700) in a year are excluded, but both tests must be met. Our guide to digital platform reporting covers the detail.
When does selling online become taxable?
Selling your own unwanted possessions is not usually trading. Buying things to sell at a profit, making goods to sell, or selling regularly can be. HMRC looks at the badges of trade to decide. If you are trading, the first £1,000 of gross trading income each tax year is covered by the trading allowance. Above that, HMRC’s guidance says you need to tell it, and you must register for Self Assessment by 5 October after the end of the tax year.
Once you register, you pay Income Tax and National Insurance on your profits. If your sales pass the VAT registration threshold, VAT applies too.
What might HMRC ask an online seller?
- whether all your platform income is in your return, across every marketplace you use;
- how you worked out profit, including stock, postage, packaging and platform fees;
- whether you are trading or just selling personal items;
- how your sales compare with your bank statements;
- whether you should have registered for VAT.
An enquiry normally has to start within 12 months of the date you file a return on time. After that HMRC can still make a discovery assessment: generally up to 4 years after the end of the tax year, 6 years if the loss of tax was careless and 20 years if it was deliberate.
What if I have not declared past sales?
Penalties are lower if you tell HMRC before it contacts you. For a careless inaccuracy, the penalty can be cut to nothing for an unprompted disclosure, compared with a minimum of 15% once HMRC has prompted you. See HMRC penalties for tax return errors. Tax investigation insurance is for checks HMRC opens after your cover starts, so it will not cover a disclosure you are already making or an enquiry already under way.
What does tax investigation insurance pay for?
It pays your accountant’s professional fees for dealing with HMRC: letters, information requests, meetings and negotiating the outcome. Solar Protect cover responds to full and aspect enquiries into Income Tax and Corporation Tax returns and to VAT compliance checks. It never pays the tax, interest or penalties themselves. Read what tax investigation insurance does not cover.
How do I get cover?
Read how our tax investigation insurance works or get a quote today. If you trade as a sole trader, see also tax investigation insurance for sole traders.
Related guides: tax investigation insurance for content creators.
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 7 October 2026. This guide is general information, not personalised tax advice. Cover is subject to the policy terms, conditions and exclusions.