Since 1 January, 2024 HM Revenue & Customs is requiring digital platforms to collect information on how much their users make – and those making a profit selling items on sites such as eBay, Vinted and Airbnb are now be on the radar of the taxman in the UK.
Although, until now, thousands of people making a small income from online trading never declared their earning from these popular websites, new rules brought into force this month means that digital market places in any countries that have signed up to rules set out by the Organisation for Economic Co-operation and Development (OECD), have started collecting information on UK-resident sellers and will share that with HMRC.
“HMRC has got new powers to find petty tax cheats on eBay as from today – whilst ignoring the massive problem that its failure to properly tax fraudulent limited companies has created. The effective regulation of companies in this country is long overdue. Companies should bear the cost of doing this because all honest ones would gain. And the tax gain could be at least £12 billion a year. So why will no politician talk about this?,” questioned Richard Murphy, Professor of Accounting Practice at Sheffield University, in a tweet posted today.
For Folk and protest singers Chris and Kath Jordan, the latest HMRC move targeting those ones selling used items on Vintage and other second hand websites doesn’t make sense given the current green agenda being widely discussed over the past years.
“The move against folk who sell on such sites as eBay is also a move against encouraging folk to recycle old goods. It goes directly against any government recycling targets and will only serve to encourage people to keep on buying new and then throwing old stuff away,” says the Hull-based couple.
People are raising questions also on how the costs of second-hand items sold online will be calculated for tax purposes.
“HMRC taxing people on the money they make selling things on Vinted as they see it as a form of self-employment. In that case shouldn’t they be taking into account what price those items were originally bought for as realistically most people will make a slight loss not a profit?,” questions executive producer Emma Lieghio, co-founder at Neck of the woods films.
What information will be shared?
For individuals, the data collected will be their name, address, date of birth and national insurance number, plus what they have earned and paid in fees on the platform. If a property is being let, they will need its address.
Everyone has a trading allowance each tax year, which means they can earn up to £1,000 – about £83 a month – without paying tax.
Paying tax will start kicking in when a seller earns a profit of more than £6,000 from selling goods. However, goods in this instance must fall under the remit of ‘personal possessions’ – so things you already own and are selling for less than you paid (therefore technically making a loss on), or items you did not purchase with the intent of selling in order to make a profit. If you have not sold a personal possession or groups of personal possessions totalling £6,000 or more, HMRC’s website says you do not need to declare it.
It is not only those ones selling items on eBay or other second hand market places who are of the UK government’s radar. The HRMC official website lists other categories who also must declare additional earnings, including money earned from activities such as selling items at car boot sales and doing casual jobs such as gardening, food delivery or babysitting. Online content creators and those charging other people for using equipment or tools are also listed as taxpayers who need to tell HMRC about additional income.