If you’re selling goods and services online, new tax rules could affect you. HMRC has recently issued an alert for online sellers achieving profits from buying or making goods, or selling services, to check whether they are considered a trader. In this situation tax on any earnings over £1,000 would need to be paid. The alert has been triggered following the UK’s adoption of the OECD Model Reporting Rules for Digital Platforms.
What are the changes?
The rules mean that online platforms – in and outside the UK – now have to submit an annual report with details of individual sellers trading on their platform. Details which will be shared include names and sales volumes, and the information will be automatically provided to HMRC as part of an international crackdown.
Who is affected?
Many of those who are self-employed, and selling online, are affected. This includes online sellers on most platforms, including those involved in selling products, food delivery, taxi hire, clothing re-sales and short-term property rental. As a result websites such as Amazon, eBay, Deliveroo, Uber, Vinted, Gumtree and Airbnb will now be reporting seller information. The aim is to target anyone who is earning over the Trading Allowance – which allows earnings of up to £1,000 a year through self-employment. Anything over this requires you to register as self-employed and report earnings to HMRC on a self-assessment Tax Return. You’ll then need to pay tax on any sales of more than £1,000.
Are there exemptions?
If you’ve made less than 30 sales – regardless of value of these sales – you don’t need to report.
What information about online sellers will be shared?
The following details will be shared:
- Name
- Address
- Date of Birth (if the seller is an individual)
- UTR (Unique Taxpayer Reference Number) or VAT number (or the equivalent if outside UK)
- Company number (if the seller is a legal entity)
- Where the service relates to immoveable property: the address of each property, although there are exclusions for very large sellers with more than 2,000 transactions per year
What deadlines apply?
Online platforms must report any details to HMRC is 31 January of the following year, so information for 2024 should be shared by 31 January 2025. Penalties of £5,000 plus £600 per day could apply to platforms if information remains unreported.
If you’re selling via online platforms, and will exceed the £1,000 Trading Allowance, it’s vital to keep an accurate record of all transactions. This will help you avoid any issues with your self-assessment Tax Return when you come to submit it.