HMRC publishes new guidance on tax requirements for online side hustles
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Posted: Fri 23rd Aug 2024
New guidance has been published by the government reminding online sellers of their tax obligations following the introduction of new rules requiring online platforms to report information about their users.
After HM Revenue & Customs (HMRC) signed up to global rules from the Organisation for Economic Cooperation and Development (OECD), digital platforms like Amazon, eBay, Vinted, Etsy and Airbnb are now legally obliged to share how much income sellers make with the UK tax authorities.
'Side hustle tax'
Introduced on 1 January this year, the change was dubbed by some as a "side hustle tax", although no new tax has actually been introduced.
Although HMRC was previously able to request information from online marketplaces, the new regulations mean that all relevant websites operating in the UK must now routinely report information such as sellers' bank account details and the value of transactions.
Platforms must submit a report to HMRC by 31 January for the previous reporting year, so the first deadline is 31 January 2025.
To clear up any confusion, the new HMRC guidance confirms that if you buy or make goods to sell at a profit, you're likely to be trading and will have to pay tax on your profits.
Platforms and apps are required to ask individual sellers for the following information:
full name
address where you normally live
date of birth
National Insurance number
Sellers operating as a company will be asked for:
a legal business name
and main business address
a tax identification number (company registration number for a UK company)
Platforms are not required to report the information of sellers who make:
make fewer than 30 sales of goods
receive less than 2,000 euros (about £1,700) for those sales
Under UK tax rules, if you earn self-employment income over £1,000 a year, you must register as a sole trader and submit an annual Self Assessment tax return.
The HMRC guidance says you are "unlikely to pay tax if you sell personal items from your home, like contents of a loft or garage".
In separate guidance issued to online marketplaces, HMRC says failing to follow the rules could result in fines including a penalty of up to £5,000 and a continuing penalty of up to £600 per day for not reporting by the deadline.
If sellers do not cooperate by sharing information, platforms are told to consider actions such as limiting access until the details are collected, or stopping users registering on the platform.
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