Digital platforms, including but not limited to eBay, Vinted, Etsy and Airbnb, are now required to collect extra information about all sellers to track how much income they have generated and determine if they need to pay any tax. As of 1st January, HMRC has changed how it collects data from online selling platforms, with all information on sellers who meet certain criteria and thresholds now automatically shared with the tax authority.
What are the recent changes for digital sellers?
Brought into force on 1st January 2024 digital selling platforms are now automatically gathering more information from all sellers, including the number of sales made and the income earned. These platforms are required to share this data with HMRC before 31st January 2025, with the first data submission covering sales from the entire 2024 calendar year.
This change in process applies not just to UK platforms but also to international ones, aligning with the UK’s commitment to global standards set by the Organisation for Economic Co-operation and Development (OECD) designed to tackle tax evasion.
Information HMRC will request:
- Full name
- Tax ID
- Bank account details
- Amount and number of transactions
The automatic sharing of seller information is triggered if specific conditions are met, such as making 30 or more sales per year or earning over £1,700. It is worth noting that the ‘trading allowance’ allows tax-free earnings up to £1,000. However, surpassing this threshold may require you to declare your income through self-assessment and register as self-employed. It is worth noting that cashback sites are exempt from these rules, as their transactions are not subject to taxation.
These regulatory changes have raised concerns among people relying on ‘side hustle’ income, especially those selling second-hand goods. Online marketplaces like Vinted and Depop must also now share the financial details of sellers meeting specific thresholds with HMRC.
Does this include personal possessions?
According to GOV.UK there is no tax obligation on personal possessions under the value of £6,000. You may incur Capital Gains Tax (CGT) on personal possessions over £6,000 or more, the value of the gain you make determines whether you must pay CGT or not.
You may need to pay tax on the following personal possessions, but not limited to:
- Jewellery
- Antiques
- Vases
- Paintings
- Coins and stamps
The recent regulations focus on the sale of non-personal possessions. If you acquire an item with the intent to sell it for profit, it is considered a non-personal item and any earnings from its sale contribute to the £1,000 tax-free yearly allowance.
HMRC changes for digital sellers summarised
- If you are already in the habit of declaring your earnings, you can continue as usual – there will not be any changes for you.
- If you are earning more than £1,000 (the trading allowance), you will need to complete a tax return, even if you do not owe any tax on the items you have sold.
- If you fail to complete a tax return when one is required, you may receive a gentle reminder from HMRC.
- All sellers on digital platforms benefit from a tax-free allowance of £1,000, which means you do not have to pay tax on the first £1,000 you earn.
How can we help?
The new regulations highlight the importance of diligently assessing your earnings, staying aware of reporting requirements and submitting accurate self-assessment tax returns. Our personal tax team can assist you in these areas and help you avoid potential penalties for non-compliance. Get in touch with our personal tax team for further assistance and to leverage our expertise.
