Sellers on eBay, Airbnb and other sites in the UK may soon come under the radar of the UK tax agency, as digital platforms are now obliged to report some users’ financial details to HMRC.
Online sales have become a convenient way for people to generate extra income, and in many cases the amounts are not disclosed to tax officials because they are too small. However, changes to the rules have come into effect which will make it easier for HM Revenue and Customs (HMRC) to know when some people need to start reporting and potentially paying tax.
According to BBC News, under regulations that will be implemented on January 1, online platforms such as eBay, Airbnb, Vinted, and other platforms where British users sell products and services must start reporting some transactions by users on their services to the British Revenue and Customs Administration. This includes both online services offered through the website and transactions conducted within the app.
While HMRC could previously request information, the rules now mean apps and services are obliged to report.
Most users in the country will not be subject to the regulation as it only applies if the user has made 30 or more profitable trades or earned €2,000 (£1,734, $2,195). User accounts that do not meet these two criteria will not be reported to HMRC, but details can still be requested.
Users do not have to change what they are doing to report. Companies affected by the rule are obliged to submit an initial report to HMRC at the end of January 2025. The report information includes the user’s tax number, bank account details, transaction value and transaction volume.
The rules were implemented as part of an agreement with the Organization for Economic Co-operation and Development (OEDC) to reduce instances of tax evasion. By understanding the transactions, HMRC will have a clearer picture of UK residents’ side income, and what additional income is not declared.
In the UK, citizens are required to report to HMRC if they earn £1,000 ($1,265) in trading income per year, but while it is necessary to inform HMRC, this does not mean that tax is actually paid.
A spokesman for HMRC said: "These new rules will support our work to help online sellers pay their taxes correctly the first time. They will also help us detect any deliberate breaches and ensure a level playing field for all taxpayers."