News

Commencing January 2024 digital platforms such as eBay, Amazon, AirBnB and Etsy are required to make annual reports to HMRC about those individuals selling goods or services with them.

Although HMRC have had the power to request this information from digital platforms for a while the change means that these platforms automatically make these reports to HMRC annually.

This is a global initiative so HMRC can also receive information from overseas platforms if for example, you sell or rent property abroad even if you are using a non-UK digital platform.

Who is affected?

The new rules apply to those who sell goods or services through digital platforms.  For example:

• Selling items you have made on Etsy.
• Selling goods you have purchased for re-sale on Vinted or eBay.
• Selling services such as driving a taxi or Uber, food delivery etc.
• Renting out property whether that be part or your home or a holiday home.

Platforms are required to report all individuals registered with them unless they are classed as ‘casual sellers’ – i.e. they make less than 30 sales a year AND received no more than £1740 after deducting fees and commissions.

What will be reported?

The first reports are due January 2025 and these reports will include the individuals name, address and date of birth, how much has been earned along with bank account details and details of the property for those letting a property.

This information will assist HMRC to match up information with taxpayers and tax returns or identify those sellers who have not been declaring income.

Platforms are also required to send a copy of the information reported to the seller themselves.

What next?

All individuals have a trading allowance of £1000 each year, so you can earn this amount without paying tax and you would not normally be expected to complete a tax return in this situation (though if one is issued you are obliged to submit it).

If you earn more than £1000 per annum (before expenses) but are just clearing out your attic or selling clothes which you purchased at a higher price you will not be liable for tax on that income.  However, if you are re-selling goods or making things with a view to profit you are likely to be trading and should be completing a tax return.

If you have not completed tax returns you may receive a ‘nudge’ letter from HMRC requesting further information about your trading activities.  However, you should not wait for HMRC to contact you – this could result in additional interest and penalties in addition to a tax bill.  You should contact HMRC and register as being self-employed to avoid unnecessary penalties.

Please contact us if you need assistance.