ARTICLE
5 February 2024

Maximising Profits, Minimising Headaches: Navigate The New Tax Rules For Side Hustles On Platforms Like Airbnb, EBay, And Vinted

DU
Dixcart UK

Contributor

Dixcart UK offers a range of accounting, tax and legal services to individuals and businesses. Professionally qualified accountants, lawyers, tax, and immigration advisers work as one team to uncover opportunities and provide joined-up advice in an efficient manner. Dixcart UK also provides professional services to international clients across the world with interests in the UK.
In a move to tighten the tax net, HMRC has announced new measures affecting individuals engaged in online "side hustle" activities, such as selling clothes on Vinted, letting out spare rooms on Airbnb...
United Kingdom Tax

In a move to tighten the tax net, HMRC has announced new measures affecting individuals engaged in online "side hustle" activities, such as selling clothes on Vinted, letting out spare rooms on Airbnb, or trading goods on eBay.

As of January 1, 2024, digital platforms like these are now obligated to collect and share transaction details with tax authorities, signalling a global effort to curb tax evasion. This article aims to provide insights into the implications of these changes and offer guidance on what online sellers need to do to ensure compliance with the new rules.

The Impact of New Rules

The new regulations require platforms to routinely report sellers' income, covering various transactions such as; sales of handcrafted goods, second-hand clothes, taxi services, food delivery, freelance work, short-term accommodation lets, and more. This information will be shared among countries that have adopted the OECD tax rules, facilitating a concerted effort to clamp down on tax dodgers.

What are the Key Obligations for Online Sellers?

1. Tax-Free Allowances: Individuals already paying tax do not need to alter their current practices. There is a £1,000 tax-free allowance for income generated through property and a similar allowance for "trading" income, applicable to activities like tutoring, gardening, or selling new or second-hand items online.

2. Record-Keeping: While those earning below the specified thresholds may not be required to fill in a tax return, it is advisable to maintain detailed records in case they are requested by tax authorities.

3. Thresholds for Reporting: Platforms will report information to HMRC at the end of January 2025 for sellers whose activity is of significant size. The reporting obligation applies to sellers making more than 30 transactions or £1,735 a year. Sellers below these thresholds are not subject to reporting requirements.

Advice for Online Sellers

It is likely that only a small proportion of casual users of sites like Vinted and eBay will trigger the reporting thresholds, but individuals are required to assess their own tax situation.

If you believe that you may have surpassed the minimum £1,000 trading allowance, then the team at Dixcart can help. We can also help you make contact with the tax authorities as it is advisable to contact them pre-emptively, if there is any income to declare.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Find out more and explore further thought leadership around Tax Law and International Tax Law

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More