At the start of the year, new rules were implemented requiring digital platforms that allow individuals to earn income to share their user’s information with HMRC. The list of digital platforms includes Vinted, eBay, Airbnb, Uber, Deliveroo, YouTube, Etsy, and many others. These rules arise from HMRC signing up to the Organisation for Economic Co-operation and Development (OECD), enabling them to investigate the tax affairs of individuals earning income through companies operating abroad.
Under these measures, HMRC will exchange information with other participating tax authorities. Sellers will also receive copies of the details to facilitate compliance. As of January 2024, there are 36 countries in the OECD group. The first reporting deadline for these platforms is 31 January 2025.
Existing HMRC powers
Existing HMRC powers already allow the agency to demand UK-based apps and websites to provide data on sellers’ income, including their account details.
Impact of new rules
If an individual receives income via these digital platforms, there may be a reporting obligation to HMRC. Untaxed income received by an individual does not need to be reported to HMRC if it's under £1,000 in a given tax year. A tax year runs from 6 April to the following 5 April. Currently, we are in the tax year 2023/24 (6 April 2023 to 5 April 2024). If untaxed income exceeds this threshold, the income will be required to be reported to HMRC on a self-assessment tax return. A self-assessment tax return reports an individual’s total taxable income and any tax paid in the tax year to HMRC. The return will calculate the total liability for the tax year, and an individual may find that they have extra tax to pay or are due a repayment to HMRC.
The reporting deadline for a self-assessment tax return is 31 January following the end of the tax year. For tax year 2023/24, the reporting deadline is 31 January 2025.
An individual must register for self-assessment by 5 October following the end of the tax year.
HMRC can levy penalties for late notification and filing.
HMRC have specified that occasional sellers making fewer than 30 transactions and selling items for less than a total of £1,700 will not be reported.
For individuals unsure of their reporting obligations, HMRC provide a tool to check.
https://www.tax.service.gov.uk/guidance/check-non-paye-income/start/how-did-you-receive-additional-income
The tool indicates that if an individual sold personal possessions not intended for profit and the proceeds were under £6,000, there are no reporting obligations. Please note that this guidance is based on the tool’s assessment and not specific advice from HMRC.
We recommend that any individual who thinks they may be affected by the new rules use the HMRC tool above and contact Moore.