The smell of fresh bread and buttercream is thick in the air of Sarah’s tiny kitchen. She’s one of thousands of home bakers who have built a living from selling cakes on Facebook Marketplace and Instagram. Her Victoria sponges and vegan brownies have made her a local hero.
But now HMRC is chasing her. Under new rules, platforms like eBay, Vinted, and Depop must report sellers to the taxman if they earn more than £1,000 a year. For home bakers, that threshold is easily breached.
Sarah earns about £1,000 a week during the summer wedding season. “It’s not a hobby. It’s my livelihood,” she says, icing a batch of lemon drizzle.
“But they treat us like we’s criminals.” The crackdown, part of the government’s drive to close the tax gap, has hit the ‘gig economy’ – but nowhere is it felt more acutely than in the cottage food sector. Bakers argue that their margins are slim: ingredients, electricity, and packaging eat up costs.
A £5 loaf of sourdough might yield just £1.50 profit. “We’re not tax dodgers.
We’re just trying to feed our families,” says Michael, a former warehouse worker turned pie baker in Manchester. His pork pies are sold at two farmers’ markets and a local deli. He says he’ll have to register for VAT if his turnover exceeds £85,000 – a target he might hit this year.
“Then I’ll have to raise prices, and my customers will go to the supermarket. It’s a death spiral.” The government insists it’s about fairness.
“People who make money from selling goods should pay their share,” a Treasury spokesperson said. But critics point out that supermarkets pay far less tax as a proportion of their profit than micro-bakers. The British Bakers Association, which represents industrial firms, has lobbied for a higher threshold.
But the home bakers have no voice. They are too busy baking. “We need a simplified tax system for micro-businesses,” says Laura Willoughby, co-founder of the tax campaign group Taxing Times.
“A flat rate for home-based food producers would protect livelihoods and still bring in revenue.” For now, Sarah is looking at her receipts and worrying. “I might have to shut down.
Or go underground. But I don’t want to be a criminal. I just want to bake.
