People wanting to sell unwanted items online are being warned about a new “side hustle tax” set to come into force in January.
It means sellers with at least 30 transactions or making £1,700 or more annually will have to share details of their accounts with HMRC. The move has caused many to ditch online shopping sites such as eBay, Etsy and Vinted amid widespread confusion over the new regulation. Many are even unsure if they fall into the bracket and has stopped some from listing their own second-hand items online.
Eve Williams, General Manager of eBay UK, said: “eBay is complying fully with the new reporting rules in the UK and elsewhere.
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“However, there has been a lot of confusion and misreporting about the new rules. As HMRC has said, there is no new tax liability here, no new ‘side hustle’ tax.
“And consumers who are simply selling unwanted possessions are unlikely to have to pay any tax at all.”
She added: “Nearly a quarter of UK households are sitting on unwanted items worth more than £500, and these adults sitting on ‘cash in the attic’ should not be deterred from selling online. Now that it’s free to sell on eBay, this is not just a great way of making some extra money – it’s also good for the environment as these items would otherwise end up in landfill.”
Angela MacDonald, HMRC’s deputy CEO, said: “We cannot be clearer – if you are not trading and just occasionally sell unwanted items online, there is no tax due.
“As has always been the case, some people who are trading through websites or selling services online may need to be paying tax and registering for self-assessment.”
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The new reporting requirements for digital platforms came into effect at the start of 2024. Those who sold at least 30 items, earned roughly £1,700 or provided a paid-for service on a website or app in 2024 will be contacted by the digital platform in January to say their sales data and some personal information will be sent to HMRC due to new legal obligations.
However, the sharing of sales data does not automatically mean the individual needs to complete a tax return or owes tax.
Those who may need to register for self-assessment and pay tax include people who buy goods for resale or make goods with the intention of selling them for a profit, or those who offer a service through a digital platform.
To be liable for tax, these workers would need to generate a total income from trading or providing services online of more than £1,000 before deducting expenses in any tax year.
Anyone unsure whether to complete a Self Assessment tax return for the 2023 to 2024 tax year or not, can check on GOV.UK. If new to Self Assessment, they can register on GOV.UK. HMRC is working alongside online platforms to ensure sellers receive clear guidance on their tax responsibilities.
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