Online sellers face ‘ticking time bomb’ over axes, charities warn

HMRC has been accused of failing to do enough to make online sellers aware that they may need to start filing a tax return

Sellers offering goods via the likes of eBay, Vinted and Etsy face a ‘ticking time-bomb’ due to confusion over reporting rules that come into force in January, says a taxation charity.

There could be ‘chaos and confusion’ as HMRC has allegedly failed to do enough to make online sellers aware they may need to start filing a tax return, claims the Low Income Tax Reform Group (LITRG).

Web platforms must issue reports of income to the tax office in 2025.

Sellers and the taxman will be receiving information based on calendar years, which will cover more than one tax year.

This could make it more difficult to calculate what tax is due and when.

The LITRG also says there is a lack of standard reporting format for websites so sellers could receive different forms from different platforms. 

The reports are also being produced in January, one of HMRC’s busiest times. 

There was widespread confusion when the move was announced as many sellers mistakenly believed a new tax had been introduced when it is only the reporting rules that have changed.

Sellers get a trading allowance of £1,000 and anything over this limit could be taxable if they are classed as trading.

An HMRC spokesman says: ‘We’ve recently published and promoted guidance for online sellers and we run an extensive Self Assessment campaign every year, which reminds people to check if they need to file a tax return.

‘For people selling personal possessions online absolutely nothing has changed, so it’s deeply disappointing to see this scaremongering from LITRG.’