People who sell second-hand clothes online or homeowners who rent out a spare room on Airbnb are among those who could end up paying taxes on their profits under a New Year’s tax campaign.
Starting January 1, companies such as Vinted, Airbnb, Depop and eBay are required to collect and share transaction details with tax authorities.
While HMRC was already able to request information from UK-based online operators, from early 2024 there are new rules that the UK has signed up to through the international body, the Organization for Economic Co-operation and Development (OECD). , as part of a global effort to clamp down on tax evaders.
Under the new rules, digital platforms will routinely report the revenue that sellers earn through their site and will apply to sales of goods, such as second-hand clothing or handmade items, but also to services such as rentals. taxis, food delivery and short-term accommodation. come on.
The threshold for income from so-called online side businesses is set at more than £1,000 a year; Above this limit, online sellers must register as self-employed and file a self-assessment tax return at the end of the financial year.
HMRC said in a statement: “These new rules will support our work to help online sellers get their tax right first time. They will also help us detect any deliberate non-compliance, ensuring a level playing field for all taxpayers.”
It is recommended that people earning less than the £1,000 threshold do not have to complete a tax return, but should keep records in case they are requested.
Online platforms will be required to report seller information directly to HMRC, although not until the end of January 2025.
In the UK, individuals have a tax-free allowance of £1,000 for money earned through property or “business income”.
(Getty Images/iStockphoto)
Adam Jay, chief executive of second-hand marketplace platform Vinted, told the BBC that the rules would not affect many of the site’s sellers.
“It’s actually a fairly small proportion of users on our platform that will trigger this threshold where we have to provide information,” he said.
“Only those people who make a profit selling second-hand items may be eligible for tax and then it depends on your own personal tax situation what tax would ultimately be due to HMRC,” he said.
“We will actively communicate with those sellers to explain what the new requirements are and why they exist.”
Meanwhile, social media users have criticized the announcement, calling it an “unfair” rule considering that some low-income Depop and Vinted sellers rely on using digital platforms to earn extra money.
One Twitter/X user wrote: “The people I know who use Depop are all students selling second-hand clothes they got from charity shops to try to get enough money to eat. Ridiculous
“Tax billionaires and not people who can’t survive on their salary alone and are forced to sell their belongings to make some extra money during a cost of living crisis,” added another.
Another user commented that reselling more expensive items, such as second-hand camera equipment, could lead to you paying tax on something you already paid VAT on when you initially purchased the item.
One disappointed user wrote that HMRC “doesn’t care at all about tax evaders” but “has full force for ordinary people reselling items on Vinted/eBay/Depop/etc, even though we’ve already paid tax ( VAT). about said articles.”
Emma Rawson, a tax expert at the Association of Tax Technicians, told the BBC’s Today program that anyone who thinks they could earn more than the minimum trading allowance of £1,000 should contact the tax authorities.
“Don’t wait for that letter to arrive or for HMRC to contact you,” he said. “It is always best if you think there may be taxes to pay, to declare it in advance, as otherwise there may be penalties.”
The independent has contacted HMRC for comment.
