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 2024, many digital platforms are now obliged to provide information to HMRC on sellers operating through their site.
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. Those who have sold 30 or more items on any given platform where proceeds have been at least £1,700 (over a 12-month period) will have their details passed to HMRC.
Currently, individuals generating income exceeding £1,000 annually through online ‘side hustle’ or second jobs should 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 enquiries.
While this move will have a wide impact, taxpayers obligations have not changed and simply mean that HMRC is receiving more information from online platforms than before.
The rules are not designed to impose a tax charge on those occasionally selling unwanted items. An individual will need to be involved in activity which is ‘trading’ in nature for any tax charge to arise.
Contact us at tax@thomsoncooper.com if you need to discuss these changes.