Selling online and paying taxes: What HMRC digital platform regulations mean for you
Finance & Funding
In a nutshell…
- New regulations are in place from 1 January, 2024 requiring online platforms that individuals and businesses make money through, to report on their income.
- The information reported by platforms such as Etsy, Ebay, Uber and more will be shared with HMRC to cross-check with information you provide.
- You will receive copies of the information to help you with your Self Assessment.
- There is no impact if you are not trading, or you will not earn £1,000 or more per tax year from sources other than your employer.
- If you are already registered and report your income accurately through Self Assessment, there will be little impact – you might just be asked by platforms for more data for their reporting.
- If you earn £1,000 or more per tax year from sources other than your employer, you may need to register for Self Assessment.
On 1 January, 2024, new UK regulations came into effect requiring online platforms to report on the income individuals and businesses make through them. In this article, we’ll outline the change and what it means for you.
What’s changing and why?
Whether driven by the rise of the sharing economy, environmental consciousness or side hustles, there are many individuals making their assets work harder. Everything from selling unwanted items and the products of hobbies, to renting unused space and odd-jobbing is bringing additional income for millions of people.
If you earn £1,000 or more in a tax year from sources outside of your wages or salary from an employer, you may need to register for Self Assessment. You will need to complete it accurately with all sources of income. This hasn’t changed.
What is different from 1 January, 2024, is that the UK Government now requires certain website and app-based ‘online marketplace’ platforms to report on income that individuals or businesses earn through them.
Some examples of types of activity and platforms include:
- Freelance websites such as Fiverr, People Per Hour and Upwork
- Online marketplaces such as eBay, Vinted and Etsy
- Food delivery services such as Uber Eats and Deliveroo
- Taxi and private hire services such as Uber and Bolt
- Short-term accommodation letting platforms such as Airbnb and Vrbo
This data will be cross-referenced with information provided by the individuals and businesses to identify those who are not paying tax that should be, or not enough.
How will it affect me?
Click on the heading below that best describes your situation to find out more.
1
Not earning more than £1,000 from other sources, or not trading
Nothing will change for you.
You may be asked to provide additional information by platforms for their reporting. You will receive a copy of their report, but you will only need to check it and satisfy yourself that your total for all additional income in the tax year (6 April to 5 April) is less than £1,000.
If your income from sources other than employment will be less than £1,000 for the tax year, you won’t need to declare it or pay tax on it. This is known as your trading allowance.
It's still a good idea to keep records anyway, even if you won’t reach the £1,000 threshold through your trading activity, in case HMRC query it.
You also won’t be affected if you are only having an occasional clear-out of your personal property and selling items for around what you paid for them or less. In this case, you are unlikely to be classed by HMRC as a trader – but you can check to make sure.
2
Already registered for Self Assessment
If you are already registered to complete Self Assessment and you are tracking and including all sources of income – including from online marketplaces – you will experience little change.
You may be asked for some additional details from online marketplace platforms that you use, to enable them to report in line with the new regulations.
You will also be provided with a copy of the information provided to HMRC, so that you can use it to ensure you are reporting your income accurately.
3
Earning £1,000 or more and not already registered for Self Assessment, or not currently declaring all income
You will need to act if you:
- Are just starting to trade
- Will pass the £1,000 threshold for the first time
- Have not been declaring your other income before
- Have completed Self Assessment but not included all income
If you will earn £1,000 or more in a tax year (6 April to 5 April) through selling goods or services, you must register for Self Assessment.
Some people don’t realise that HMRC consider them as being self-employed, but if you’re making regular trades of products or services and making profit (ie income), you are likely to be. HMRC has some useful examples of what they consider ‘trading’. You can use these and the online checker tool to determine if you need to register.
If you are trading, you will need to keep track of income from all sources, register and complete a Self Assessment accurately.
If you’re classed as trading and you are actively avoiding paying tax on this kind of income, these new regulations will make it much more likely you will be caught and fined.
If you filed Self Assessment returns and didn’t declare your additional income or made an error, you can complete a voluntary disclosure. HMRC usually look more favourably on individuals and businesses that admit mistakes or omissions, compared to if they catch you out.
Watch-outs
Be mindful that your Self Assessment will be for tax years (6 April to 5 April) while the information platform operators give you will be calendar years (1 January to 31 December).
Be prepared that HMRC may ask whether you started making income through a platform prior to 1 January, 2024. Consider making a voluntary disclosure if needed.
Next steps...
- Have a look at HMRC’s examples if you’re unsure whether you are trading, and use the online checker tool to determine if you need to register for Self Assessment.
- Register for Self Assessment if you will earn £1,000 or more a year from selling goods and services online.
- Contact The Accountancy Partnership for more support with business tax and get 10% off your first year's fee.
- Learn more about business taxes.