HMRC tax rule change to hit ‘millions’ of eBay, Etsy, and Vinted users in days | Personal Finance | Finance

HM Revenue and Customs (HMRC) will be cracking down on online sellers and side hustlers in the New Year with a new tax rule change.

From January 1, 2024, a range of apps and websites that enable people to earn money will have to record how much people are making by using their platforms.

The sites include the likes of Airbnb, eBay, Esty, Vinted, Deliveroo, Upwork, Fiverr, Uber and more.

The move forms part of a wider tax crackdown from HMRC on people boosting their income through side hustles, freelancing, and self-employment.

This effort involves the increasing responsibility of gig platforms to record and eventually report sellers’ earnings to the tax office.

Individuals themselves will still be expected to continue submitting and paying tax on their self-employed income every year to HMRC as part of the self-assessment tax return.

The reason behind the introduction of the ‘Model Reporting Rules for Digital Platforms’ is so HMRC can spot discrepancies between information provided by a digital platform and the individual, giving the tax office grounds to launch an investigation.

These rules will come into effect on New Year’s Day, with digital platforms to start recording sellers’ income from then before reporting it to HMRC a year later.

HMRC will reportedly invest £36.69millon in this initiative and employ 24 full-time staff to launch and enforce these measures, which aim to “bear down on” and “detect and tackle tax evasion”.

Commenting on the rapidly approaching roll-out, Seb Maley, CEO of tax insurance provider for self-employed workers, Qdos, said: “This legislation has flown under the radar, but will have big implications for anyone renting their place out on Airbnb, freelancing on Upwork or Fiverr, or driving for Uber – whether that’s as a side hustle or full-time job.

“The crux of it is that HMRC doesn’t trust the growing number of people with side hustles in the UK to accurately report how much money they’re making this way – so the tax office will go directly to these platforms, who will become responsible for recording this information and handing it over to HMRC.

“HMRC will then compare it with the tax returns submitted by these people. If the numbers don’t add up, HMRC has everything it needs to launch a tax investigation.

“Needless to say, it’s vital that people earning money this way make sure of their tax compliance.”

The Minimum Trading Allowance is £1,000 a year, which means anyone earning more than this via self-employment, and above the personal allowance, needs to pay tax on that income.

Mr Maley said: “The latest figures suggest there are 7.25 million gig workers in the UK, with one in six adults working a gig job once a week – with this in mind, the incoming measures are set to impact millions.”