New HMRC Reporting Rules for Digital Platform Sellers

New HMRC Reporting Rules for Digital Platform Sellers in 2024

If you have a side hustle or receive income using digital platforms then you should be aware of some changes HMRC have made to ensure appropriate taxes are collected.

Starting from 1 January 2024, there are significant changes coming to the way income from digital platforms like eBay, Vinted, Etsy, and Airbnb is reported to HM Revenue & Customs (HMRC) in the UK.

Here’s an overview of what’s happening, the implications, and some tips on managing your tax obligations.

What’s Happening

New Reporting Rules

Digital platforms will be required to collect and report seller data to HMRC, in accordance with Organisation for Economic Co-operation and Development (OECD) regulations.

Reporting Timeline

Although the platforms start gathering data from January 2024, they’re not obliged to submit their reports until 31 January 2025.

Scope

The reporting requirements include a range of goods and services, encompassing accommodation, transport rental, personal services, and tangible goods.

Implications for tax payers

Cross-Referencing by HMRC

HMRC will utilise the data from these platforms to cross-reference with their records, ensuring accurate income reporting and identifying unreported business activities.

Exemption for ‘Occasional’ Sellers

If you facilitated fewer than 30 sales and received no more than €2,000 (approximately £1,700) in a reportable period, you might qualify for the ‘occasional’ seller exclusion.

£1,000 Trading Allowance

Each individual has a £1,000 trading allowance per tax year, which can be offset against the turnover generated from these activities. Alternatively, you can opt to deduct actual expenses.

Tips for Taxpayers

Record-Keeping

Keep detailed records of your sales and expenses. This will assist in reporting accurate figures to HMRC and claiming any allowable expenses.

Understand the Trading Allowance

If your annual gross income from these activities is £1,000 or less, you may not need to report it to HMRC. However, if it’s more, you should.

Check for Exemptions

If you’re an ‘occasional’ seller, understand the exemption rules and see if they apply to your situation.

Stay Informed

Platforms should provide you with a copy of the information reported to HMRC. Use this to cross-check with your records.

Consult a Tax Professional

If your selling activities are substantial or if you’re unsure about the tax implications, it’s wise to consult a tax adviser or an accountant.

FAQs

All sellers on digital platforms who earn income from sales or services, including ‘occasional’ sellers, will be affected by these new reporting requirements.
Yes, sellers will receive a copy of the information that platforms report to HMRC, helping them to verify the accuracy of reported data.
If your sales exceed the £1,000 trading allowance, you should report this income to HMRC, potentially through a self-assessment tax return.
The basic reporting requirements are similar across digital platforms, but there may be slight variations based on the nature of services or goods sold.
Non-compliance can lead to penalties from HMRC, so it’s important to accurately report your income and understand your tax obligations.
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In Conclusion

These changes are part of a broader effort by HMRC to improve tax compliance and create a level playing field between digital and traditional businesses.

Sellers using digital platforms should be aware of these changes and take steps to ensure compliance.

Remember, even though these rules become operative in 2024, the first reporting by platforms will not happen until January 2025, giving you time to prepare and adjust.

For further information, check out this link on gov.uk

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