The last few years have seen a real boom in digital services that allow people to sell or rent out their belongings.

Digital selling platforms such as Depop, Ebay and Vinted have become an increasingly popular way for people to get rid of stuff they no longer want or need, and make a bit of money at the same time.

However, people making extra cash this way should be aware that the government is introducing new rules that will change the way tax is reported by these platforms.

Here’s what you need to know.

What are the new rules?

The new regulations being introduced from January 1, 2024, will require online selling and renting platforms to report the income generated by their users directly to HMRC. The change is part of the government’s initiative to collect the right amount of tax from people’s side businesses.

The rules will affect any digital platforms in the UK that enable you to sell goods or services. This includes any apps or websites that allow you to offer short-term rental accommodation (such as AirBnB), food delivery services (such as JustEat or Deliveroo), taxi services (like Uber) and online marketplaces (like Ebay, Etsy, Depop, Vinted and so on). For most people, this means their use of online marketplaces and short-term rental sites.

These platforms will need to let HMRC know exactly how much money their users make through their selling and letting activities. Platforms face substantial fines if they fail to submit the correct figures on time, with the first reporting deadline on January 31, 2025 – just over one year after the rules come into force.

However, if you don’t sell much online, and you’re simply selling your old stuff rather than actively ‘trading’, you don’t need to worry. Only sales over around £1,700 for more than 30 items sold in a year per individual will need to be reported by platforms to HMRC. However, you may still have certain tax obligations (find out more below)

How does this affect sellers?

The good news for sellers on these platforms is that these changes probably won’t affect you directly, unless you’re a trader who makes or buys goods specifically to sell. The new regulations mainly affect the platforms themselves, but they don’t change who needs to pay tax, how much tax must be paid or how much you can be fined for failing to do so. However, for those who have been avoiding paying tax on selling sites, the new changes will make it easier for HMRC to take action.

Do I need to pay tax as an online seller?

Don’t panic if you have made a few online sales this year and haven’t filled in a tax return – you only need to do so if you make above a certain amount per year.

In general, you will need to complete a tax return if, within a tax year, you:

  • Earned at least £1,000 in income from self-employment (such as through these platforms)
  • Earned more than £2,500 from renting out property.

You can learn more about when you need to complete a tax return and how to do so in our article Beat the 31 January tax deadline!

If you fail to file your return one day after the deadline, you’ll be fined £100. After this, you’ll receive an extra £10 fine for each additional day you fail to submit it, up to 90 days. This means that you can be charged as much as £1,000 for failing to file a return in a three month period. You’ll receive a greater fine if you fail to file your return six months after it’s due, and even more after 12, so make sure you file on time.

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