The recent introduction of HMRC’s new regulations for online platforms has left many of us scratching our heads: Do these rules apply to me? Do I need to pay more tax? How does this affect my ongoing business? In today's article, we run through some of the key questions and myths surrounding these new regulations, helping you to keep up to date with the latest in tax news.
What are the changes?
Beginning 1 January 2024, HMRC requests all “online marketplaces“ (including online sales platforms, delivery services, and property rental websites and apps) to share a range of data, including addresses, income and bank account details for all users (see our overview here).
Do these rules apply to me?
If you have a side hustle, regularly selling goods or providing services through online platforms (e.g. Vinted, eBay, UberEats, Airbnb), then your operations likely fall under the heading of “trade”. As such, these regulations would apply to you.
However, if you are simply an “occasional seller” – perhaps emptying out a wardrobe onto Vinted or popping a couple of items from the attic on eBay – then you are less likely to fall under the category of “trader”.
“Occasional sellers” are exempt
The government has made clear that they are not interested in taxing “occasional sellers”. If your sales do not exceed £1,000 per tax year, you do not need to report them to HMRC. Check out HMRC’s handy additional income tool for peace of mind about your Self Assessment obligations.
HMRC states under the new regulations that you will receive a copy of your tax-related user data from digital platforms. This could help you to determine your online income and expenses and deciding whether you should be paying tax.
Is this a new tax?
No. Provided that you are already submitting your Income Tax Self Assessment correctly, there will be no change: this is a new regulation for digital platforms – not the introduction of new tax obligations. You should not expect to pay more taxes than usual.
What do I need to do?
There is no new action for you to take, other than to file your Tax Returns (i.e. your Income Tax Self Assessment) as usual. This can be done through HMRC-recognised digital services such as AbraTax. Assuming you are correctly declaring your online income, there should be no change to your business practices.
Does this apply to my own website?
HMRC’s new regulations apply to digital platforms connecting sellers and service providers with third-party customers. If you are selling items from your own website, then you should not expect to report data to HMRC in the same way as digital platforms. Simply submit your Income Tax Self Assessment as usual.
Conclusion
HMRC’s recent regulations for digital platforms may have raised eyebrows, but disturbance for sellers and service providers using these platforms is minimal. If you operate as an occasional seller with sales below £1,000 per tax year, relax: you're exempt anyway. For online traders, you might be affected – but you most likely don’t need to take any action. Simply continue filing your tax returns.