Applications like Airbnb, eBay, and Vinted to Share More Information with HMRC

This new year, there will be a tax net tightening, especially for people who make money from online “side hustle”. Side hustle activities such as selling clothes online and letting out their spare room for rent will be included in this increasing tax bracket. According to reports, starting from January 1st firms including Vinted, Airbnb, and eBay are obliged to share the collected details of such transactions with the tax authorities of the country. This will allow HMRC to look after anyone and everyone who is linked to these transactions and track down anyone who should be declaring extra income but currently is not.

Previously HMRC was already able to request information from UK-based online operators. Now from the start of this year, the authorities have set new rules that made the UK sign up as part of a global effort to clamp down on tax dodgers, via the international body, the Organisation for Economic Cooperation and Development (OECD). This set of new rules requires the digital platforms to report the income sellers, who are getting through their sites frequently. This will apply to sales of goods such as second-hand clothes and things that have been handcrafted. But this is not all, services include food delivery, taxi hire, short-term accommodation, and even freelance work along with renting out the driveway for parking. This information will be shared between countries that have signed up to the OECD tax rules.

According to the government, these new rules would help it “bear down on tax evasion”. This will happen as the sellers on the digital platforms now will be treated similarly to the traditional businesses. An HMRC spokesperson said, “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.”

The first obligation for the firms to report the information to HMRC will be at the end of January 2024. This obligation will include information such as bank account details, and tax ID, along with the volume and value of the transactions for those sellers whose activity is of significant enough size. These rules, just like any other, also have some exceptions. Online sellers who are already paying taxes would not need to be altering what they are already doing. This rule will also not apply to individuals who have a £1,000 tax-free allowance for money that is made through property.

There is also another £1,000 allowance for “trading” income. For example, if the party is offering tutoring or gardening, or if the party is selling new or second-hand clothes online. People who are also earning below the mentioned thresholds, may not have to file for tax returns as well. However, they must keep records in case they are asked for them. The chief executive of the second-hand marketplace platform Vinted, Adam Jay said that he did not believe these new rules would impact many of the sellers on the site. “It’s actually quite a small proportion of users of our platform who will trigger this threshold where we need to provide information,” he mentioned.