HM Revenue & Customs is stepping up its scrutiny of “side hustle” earnings, requiring online platforms such as eBay, Vinted and Airbnb to provide information on users’ 2024 income by the end of this month.
However, concerns have been raised that the discrepancy between the UK tax year (April to April) and the OECD reporting period (January to December) could lead to many casual sellers making errors in their tax returns.
The Low Income Tax Reforms Group (LITRG) warns that people may unwittingly provide inaccurate figures to HMRC because the data they receive covers the calendar year, not the tax year. For example, only earnings from January to March 2024 will be relevant to the self-assessment due this month, yet the total figure provided by online platforms spans all 12 months of 2024.
“Only a quarter of the data people will receive is relevant to their current tax return,” says Meredith McCammond, technical lead at LITRG. “This could create confusion, especially for those filing a return for the first time and needing assistance during HMRC’s busiest period.”
Under the new guidance, any platform user who earns more than £1,700 or makes 30 transactions a year will have their information passed to HMRC. Although this is not a new tax, it may impose a tax on individuals who were previously unaware of the necessity of advertising online sales. Accountancy firm BDO’s Dawn Register commented that despite the incomplete data, HMRC would still have enough information to launch an investigation if a seller’s sales appeared to be high.
“The new rules could mean there are some nasty surprises for people who are unaware of current legislation or who have not declared their earnings,” Register says. At the same time, HMRC could be surprised by how much some ordinary online sellers are earning.
Many casual sellers and ‘dumpers’ will be protected by the UK Trading Allowance, which allows individuals to earn up to £1,000 a year from casual trading without paying tax. A HMRC spokesperson confirmed that “absolutely nothing has changed” for people selling unwanted personal items. The new focus is on those who conduct consistent trading or make gains from sales.
Mirona Constantine of RSM UK recalls that when the measures were introduced last year, public anxiety mounted: “Chaos ensued as people thought HMRC might suddenly tax all the extra money they earned from selling unwanted Christmas presents. HMRC has since provided detailed guidance.
Practical steps for sellers
The new data, scheduled to be published in quarterly batches, should help sellers match platform data more closely to their tax liabilities. But for a smooth process, experts advise paying close attention to the following:
• Dates: Find out which quarter applies to the current self-assessment period (January to March 2024 for tax year 2023-24).
Allowances: Remember that the first £1,000 of trading income is generally tax-free, and separate capital gains rules may apply if you make a profit selling valuable items.
• When in doubt, ask: If you are not sure, seeking advice from HMRC or a tax professional can help avoid mistakes or costly investigations.
With this expanded reporting, the government hopes to reduce hidden or accidental non-compliance. However, until sellers feel confident about how and when they apply numbers from eBay, Vinted and other platforms, the risk of “nasty surprises” remains.
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