It has been announced that HMRC will be receiving more information from online selling platforms such as eBay, Vinted and AirBnB to ensure that people are paying the correct amount of tax.
HMRC has always been allowed to request this information, but from 1st January, the platforms are legally required to collect and share the information.
Much has been made on social media about this being a ‘tax grab’ by HMRC and people having to pay tax on things they have already paid tax on, so let’s clear up a few of the myths.
If you are buying items with the aim of selling them for a profit then that is trading, and that would be subject to tax whether you are selling online, through a shop or on a market stall. The platforms are only required to make reports on sellers who have 30 or more sales, or total sales over £1,735, so most day to day sellers will not be effected by this anyway.
If you are selling old items you have found in your garage that wouldn’t be considered trading. If you bought something years ago for £50 and sold it online for £5 you wouldn’t be making a profit so there is no tax payable on the transaction. There is a £1,000 trading allowance meaning anything below that is not subject to tax anyway.
These measures are aimed at levelling the playing field and catching people who are using the platforms to operate businesses and not paying their fair share of tax.
If you are using these platforms to trade then we advise you to register for and declare whatever taxes are applicable to you – income tax, corporation tax, VAT etc. Most of the platforms have back end systems to assist sellers recording their sales and complying with their tax requirements so it is not as difficult as you may think.
Speak to an accountant to discuss what taxes you should be declaring and paying so that there are no nasty surprises from HMRC further down the line.