In a bid to tighten tax regulations and combat tax evasion, HMRC is implementing measures affecting sellers on platforms such as eBay, Vinted, Airbnb and Etsy.
Effective from 1 January, many digital platforms are now mandated to collect under new international rules adopted by the UK through the Organisation for Economic Cooperation and Development(OECD).
The reporting obligation applies not only to the sale of goods, such as second-hand clothes and handmade items, but also encompasses services like taxi hire, food delivery and short-term accommodation letting.
Currently, individuals generating income exceeding £1,000 annually through online side hustles must register as self-employed and submit a self-assessment tax return. While those earning below this threshold are often exempt from filing a tax return, it is recommended that they maintain records in case of inquiries.
Online platforms are mandated to report seller information to HMRC, with the first reports expected at the end of January2025. As a result, sellers are advised to stay informed and comply with tax regulations to avoid potential penalties.
While this move will have a wide impact, tax experts at the Low Income Tax Reform Group reassured taxpayers that their obligations have not changed:
“The new rules have caused a great deal of confusion, but they simply mean that HMRC is receiving more information from online platforms than before.
“If you are following existing rules and declaring your income as required, then you don’t need to worry or do anything differently.”
Contact us to discuss these changes.