This is the month that sellers can expect to hear from marketplaces and online platforms, informing them that they will be sharing sales data with HMRC. Starting in January 2025, platforms will report annually to HMRC for the previous year and should be sharing a copy of the reported data for your records.
It doesn’t matter if it’s eBay, Vinted, Airbnb, if you have traded more than 30 items or earned more than £1,740 after deducting fees and commissions or taxes, the platform is obliged to inform HMRC of your sales data and turnover for the previous 12 months.
The question is, will this result in a Income Tax liability and, despite being dubbed the ‘Side Hustle Tax’, there is no new tax or liability. Nothing has changed apart from the fact that if you should have been paying tax HMRC will now know you should if you don’t fill out a tax return.
eBay have been very clear saying that your sales data will be sent to HMRC if:
- Your total sales on eBay is equal to or more than £1,740 after deducting fees and commissions or taxes
- You complete 30 or more sales transactions on eBay (cancelled transactions are not included in the calculation)
Your total eBay sales for the year are calculated based on the full amount received for your sales transactions excluding:
- Shipping amounts paid to eBay
- VAT collected and remitted by eBay
- VAT charged on fees
- Amounts deducted by eBay for fees, coupons, cancelled or deleted orders
- Returns
It’s worth bearing in mind that even if marketplaces don’t report your sales to HMRC due to you falling below these limits, if you sell on multiple platforms or also have income from rental through sites like Airbnb, you may still have liability for Income Tax. Check out this HMRC page to determine if you need to report your income to HMRC (normally by completing a tax return).
The sharing of data doesn’t automatically mean that there is a tax liability, and there is an allowance if generate a total income from trading or providing services online of less than £1,000 (before deducting expenses) in any tax year. NB if you claim the £1,000 allowance then you can’t offset any expenses against your tax bill.
If you’re only selling personal possessions you’ll probably not have to pay Income Tax on these. However, depending on the items you sell and how much you sell them for, you may need to pay Capital Gains Tax. This applies to selling personal possessions where any single item is worth more than £6,000.
HMRC’s Additional Income Checker Tool
HMRC have an ‘Additional Income’ tool that we would highly recommend that you use if you want to be certain if there is any tax due. It covers Selling goods, Selling personal possessions, Providing a service, Renting out land or property, and Creating online content.
Once you’ve run the tool make sure that you screenshot your responses and the results. The information entered into the form is not stored or used by HMRC but if they investigate your tax situation at least you’ll be able to use the information as justification to why you don’t owe any tax.
One Response
The Capital Gains Tax allowance for this current tax year is £3000 not £6000