Starting from 1st January 2024, digital platforms such as Etsy, Airbnb, and Uber will be responsible for collecting information about the money their users earn selling goods and services. HMRC have been able to request this information in the past, but the digital platform reporting rules mean platforms must start collecting this data from 2024, and reporting it from January 2025.

What is a digital platform?

For these purposes, a digital platform includes software, websites, online marketplaces, and apps which connect sellers to other users in order to supply goods and services.

Who is affected by the digital platform reporting rules?

The new rules set out to minimise the risk of tax avoidance in sellers who use digital platforms to provide goods and services, such as:

• Private hire services and taxi drivers
• Food delivery networks
• Freelancers
• Short-term accommodation lettings
• Tangible goods sold through an online marketplace

Anyone who earns an income through a digital platform, whether you’re renting out your driveway or selling homemade badges on Etsy, might have their sales data passed on to HMRC.

The measures aren’t just restricted to the UK either. HMRC have confirmed that data will be shared with other tax authorities so if you’re UK based and sell overseas, or if you’re overseas and selling to the UK, this could still affect you.

 
Platforms won’t need to report ‘occasional’ sellers who, for these purposes, are classed as:

• Making fewer than 30 sales
• Receiving no more than €2,000

Will HMRC know if I earn money online?

The digital platform reporting rules mean that the app or website you use to sell services or goods must report what you earn from them – if the volume of sales or the amount you receive meets the criteria above.

What will HMRC do with that information?

HMRC will collate the data reported by each platform and match it to the correct taxpayer. You might find some platforms ask for additional information to enable this, such as your UTR number or documents (like a passport) so they can verify your identity.
 

Do I still need to send a tax return?

Yes, even though most digital platforms will now be responsible for informing HMRC about the money you earn from them, the usual rules about tax returns still apply.

If you’re registered to submit Self Assessment tax returns, or need to register, you should carry on as normal unless your situation changes (in which case, remember to tell HMRC!).

Will I pay tax if I sell my old clothes online?

The short answer is ‘maybe’. If you’re selling clothes online and worried about tax, it’s important to remember that the rules around paying tax haven’t actually changed. If you receive more than £1,000 of untaxed income from self-employment, property or ‘miscellaneous’ income in a tax year (6th April – 5th April) then you’re required to register for Self Assessment and submit tax returns.

What has changed is that online selling platforms will now tell HMRC if you make more than 30 sales, or receive more than €2,000. It’s important to keep a record though. If you make 3 sales and receive £1,100 then the platform might not automatically share your details to HMRC, but you will technically be over the threshold for tax registration.

Does this affect the trading allowance?

No, the digital reporting rules won’t change any tax relief or allowances that you’re entitled to. For example, if your total self-employed earnings are less than the £1,000 trading allowance in a tax year (6th April to 5th April), then you won’t need to register for Self Assessment or submit a tax return.

You should also continue to claim tax relief on any allowable expenses that you might have.

How will I know what the platform told HMRC?

The platform will be required to provide a copy of any data it sends to HMRC about you, but keep a very careful eye on the dates covered by the reporting period:

• Platforms will report their data based on a calendar year (1st January – 31st December)
• People who submit a Self Assessment tax return usually report their finances on a tax year basis (6th April – 5th April)

What will I need to do?

The new digital platform reporting rules don’t impact your responsibilities around recording and reporting on your income – these stay the same. That said, it’s even more crucial that you:

• Are meticulous about recording earnings and expenses in your bookkeeping
• Sign up for Self Assessment if you need to
• Report your income figures accurately

 
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