For many, freelancing, renting your spare room, or selling clothes via popular apps such as Vinted has been a nice little side earner. However, in a bid to reduce tax evasion, the HMRC has introduced new rules that will enable them to have sight of online sellers who should be declaring additional income.
This takes effect from January 1st following the UK’s recent sign up to the UK Organisation for Economic Cooperation and Development (OECD), as part of a global bid to put a stop to tax dodging.
As a result, if you sell goods or provide services via apps and sites such as Uber, Deliveroo, Etsy, eBay and Airbnb, these digital platforms are now required to pass on information about your online business and report consistent income sellers are receiving.
So what do the new rules state?
Historically, HMRC has been able to request information from digital platforms in the UK, however, the new rules make it mandatory for these digital platforms to report income sellers receive from sales of goods and services, including hand-crafted goods, personal resale of clothes, freelance work, rentals such as rooms and parking, taxi hire, and delivery of food ordered online.
As an online seller you must check if you are required to declare your income through your self-assessment tax return.
Information shared will be between all countries that have signed up to the OECD tax rules.
First data-shares are to be made by digital platforms by 31st January 2025. This first wave of information will cover income generated in 2024.
Reports to the tax authorities are to include the size and value of transactions, tax ID and bank account details.
Your information will not be shared if you only sell a small number of goods/services per year – but it’s worth checking
The cap for this information sharing is if you sell a minimum of 30 items, or if you are earning £1,700 or more. In some instances, you may be required to pay tax on income over £1,000.
What does this mean for you?
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