HMRC crackdown on side hustles

New HMRC rules for selling or earning supplementary income via digital platforms

If you engage in online selling through platforms like eBay, Etsy, or Vinted, rent out your property on Airbnb, or earn supplementary income by offering services on platforms such as Deliveroo or Uber, it’s crucial to be aware that these platforms will soon be sharing your information with HM Revenue & Customs (HMRC).

What are the changes?

Commencing from January 2024, digital platforms are now mandated to gather additional details about sellers, including the number of sales and the total income generated. By January 31, 2025, these platforms are required to automatically transmit this information to HMRC, encompassing data for the current 2024 calendar year.

Previously, HMRC could access sellers’ information from UK-based online platforms when necessary and proportional. However, the new automatic data-sharing process, inclusive of overseas platforms, has been implemented following the UK’s adherence to international rules established by the Organisation for Economic Co-operation and Development to combat global tax evasion.

Will my data be shared?

Automatic sharing of information with HMRC is conditional on whether you sell 30 or more items annually or have total earnings exceeding €2,000 (approximately £1,700). If your sales volume is below this threshold, it may not be a concern, although you might still be liable to pay tax if your earnings surpass £1,000 from selling.

The new regulations extend to individuals providing services or renting out property or vehicles on digital platforms. Digital platforms are broadly defined as any “app, website, or other type of software connecting sellers to consumers,” covering numerous popular sites and apps.

Will I have to pay tax?

Importantly, these changes do not introduce a new tax, but they enhance HMRC’s visibility into individuals’ income from digital platforms. If you previously did not owe tax on these earnings and continue using these platforms in the same manner, you are not required to start paying tax now.

The modified process also enables HMRC to share data with tax authorities in other participating countries, facilitating cross-border cooperation. If your platform earnings in a tax year amount to £1,000 or less, you are likely covered by the ‘trading allowance,’ allowing tax-free income without reporting to HMRC.

However, if your earnings exceed £1,000, the obligation to inform HMRC and potentially pay tax depends on the nature of your income. If it involves selling goods online, the crucial factor is whether you are considered a “trader,” requiring income declaration through self-assessment.

For those earning through property rentals, services, or a combination of activities, a self-assessment tax return is generally necessary.

What should I do?

If you suspect owing taxes, prompt submission of a self-assessment tax return through Gov.uk is advisable. The deadline for the 2022/2023 tax year was January 31, 2024, 11.59 pm. Even if a self-assessment is required, it does not necessarily mean you owe tax, depending on entitlements to allowances. If you believe you do not owe any tax, and a digital platform shares your information with HMRC, reviewing the provided data can confirm your status and eliminate the need for a self-assessment tax return.

Please contact us if you are unsure of whether you need to report income from digital sources. Assessing your position will be straightforward and if there is a need to disclose to HMRC, it is better to come forward before the dreaded brown envelope is received.  We also provide a wide range of additional Tax services throughout Kent, London and Sussex, including Tax disputes and Tax investigation services.