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Last updated: 5 Jan 2024

Even more digital marketplace platforms now required to share information with HMRC

HMRC is continuing to focus on those making money online from digital platforms such as eBay, Vinted, Airbnb and other similar online platforms.

From 1 January 2024, in accordance with the UK signing up to the international body, the Organisation for Economic Cooperation and Development (OECD), these platforms are now required to collect and share information with HMRC, allowing HMRC to determine who it believes is earning taxable income that is not being appropriately declared.

The new rules will mean that these digital platforms will be required to record and report online sales made by its users. Those using such digital platforms to sell clothes online, rent a room in their house, or other ‘side hustle’ activities should therefore carefully review their tax position. The information provided to HMRC will show the users National Insurance Number and the value and volume of transactions, allowing HMRC to determine who it believes should be paying tax.

This approach is part of HMRC’s wider aim to tackle tax evasion and treat digital platforms the same way as traditional businesses. As part of this project, HMRC have already launched specific campaigns to target online sellers and content creators.

There is currently a £1,000 allowance per tax year for trading income, so those earning less than this will not be required to pay tax. However, HMRC may ask for proof that earnings are less than the trading allowance. It's therefore recommended for individuals utilising such digital platforms to generate income to keep adequate records. However, those simply selling odd personal items that are no longer needed or de-cluttering may not necessarily be considered trading, but those with either a high volume or high value of transactions can expect questions from HMRC.

The first information HMRC will receive from these platforms will be on 31 January 2025. Following this, those earning above the trading allowances will receive a letter from HMRC notifying them of their responsibility to declare their income via Self-Assessment going forward, correct their historic tax position, and pay any outstanding tax due.

About the author

Justin Stevenson

+44 (0)20 7710 3181
stevensonj@buzzacott.co.uk
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How can Buzzacott help?

As there is some time until HMRC receive the first report from these platforms, there is still time for individuals to review their position and, if necessary, come forward and pay the historic tax due.

It is always best to be pro-active in these matters and preferable to make a disclosure to HMRC rather than respond to an enquiry. This is considered an unprompted disclosure and will significantly reduce any penalties HMRC may charge. Buzzacott can help undertake a full review of your income from digital platforms and guide you through the disclosure process to correct historic tax liabilities and ensure penalties are minimised.

Knowing that income from online activities should be taxed and choosing not to come forward could lead to much higher penalties and, in extreme cases, potentially criminal prosecution.

Alternatively, should your activity be considered a hobby and therefore not taxable, Buzzacott can assist in making such arguments to HMRC and resolving the matter as swiftly as possible.

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