From 1^st January 2024, digital platforms such as Ebay, Vinted and Airbnb will be required to collect and report information on their sellers’ income. This has raised concerns with users of these online marketplaces, but how much will they be affected?

What do the New Rules Mean?

Digital platforms will now need to provide breakdowns of sales made on their sites by sellers of goods and services by the end of January 2025. HMRC hopes that this system will allow information to be exchanged more quickly and efficiently. It will be as available as tax information of traditional businesses, making the tax system fairer.

It has been ruled that the digital platforms must provide a copy of the information given to the seller. This will help users to evaluate if they will need to pay tax. It also allows for transparency with what is being shared.

Examples of platforms which will be impacted include Ebay, Vinted, Depop, Etsy, Amazon, Airbnb, Uber, Deliveroo, and Fiverr.

What Information Will Digital Platforms Share?

Digital platforms will be required to provide the following information to HMRC:

• The seller’s name.
• The seller’s address.
• The seller’s National Insurance number.
• Income earned during the year.
• Any fees incurred on the platform during the year.

If the income relates to property lets (i.e., Airbnb listings), the addresses of these properties will also be provided.

It is possible that digital platforms will increase their fees to cover the admin cost of providing this information, however this has not been confirmed.

Do I Need to Pay Tax on my Online Income?

You will only need to pay tax on your online income if you are trading or making capital gain.

To be classed as trading you must be producing or purchasing goods for resale with the intention of making a profit. If you are selling items from around the house that you already owned it is unlikely that you will be required to pay tax.

If you are trading, but your income from the digital platform was less than £1,000 (before expenses) you are not required to inform HMRC. This is because it will be covered by the Trading and Miscellaneous Income Allowance. The allowance is available to all sole traders.

Examples

Vinted, Ebay, or Depop income you receive after selling clothes from your own wardrobe that you no longer wear is not trading; you would not be taxed. However, selling clothes you have purchased purely to resell for profit through these digital platforms is trading, and would be classed as taxable income.

If you were to sew the clothes yourself and sold them through Etsy or Amazon, this would also be classed as taxable income.

You can find more information about self-assessment tax returns here. Unsure of how to pay your self-assessment bill? Please find more information here on the topic. And, if you have any further questions regarding these changes or tax returns, do not hesitate to contact us.