Are you selling online and making a little extra income?
Well, if you are, as from 1st January 2024 you will now fall foul of UK tax rules if you do not declare the income generated from these sales.
Companies like Etsy, eBay, Vinted, Airbnb etc. are obliged to collect and share details of such transactions with the tax authorities. That will allow HMRC to zero in on anyone who should be declaring the extra income but isn’t.
While HMRC was already able to request information from UK-based online operators, from the start of this year there are new rules that the UK has signed up to in cooperation with the OECD – Organisation for Economic Cooperation and Development, as part of a global effort to clamp down on tax evasion.
New rules
The new rules require digital platforms to report the income sellers are getting through their site on a regular basis.
It will apply to sales of goods such as second-hand clothes and items that have been handcrafted, but also services such as: food delivery, taxi hire, freelance work and accommodation lets or even renting out your driveway for parking.
Rule summary
- Online sellers already paying tax do not need to alter what they are already doing.
- Individuals have a £1,000 tax-free allowance for money made through property.
- There is also a £1,000 allowance for trading income – for example, if you offer tutoring or gardening, or if you are selling new or second-hand items online.
- People earning below those thresholds may not have to fill in a tax return, but should keep records in case they are asked for them.
The information will be shared between countries that have signed up to the OECD tax rules.
The UK government said the new rules would help it ‘bear down on tax evasion’, as sellers on digital platforms would now be treated more like traditional businesses.