New government rules to require digital platforms to report information about sellers

Online platforms and marketplaces such as Etsy, Amazon and Airbnb will be required to record how much money sellers are making and report the data to the government under new rules being introduced on 1 January 2024.

The changes are the implementation in the UK of Organisation for Economic Co-operation and Development (OECD) rules that require digital platforms to report the data to help sellers comply with their tax obligations and allow government authorities in the country where the seller is relevant to have the information to check against their tax records.

The regulations came into force in the European Union on 1 January 2023, but have been delayed in the UK until 1 January 2024. Digital platforms in the UK need to deliver the first reports by 31 January 2025.

In a policy paper, HM Revenue & Customs (HMRC) said:

"The regulations will support the government's work to help taxpayers get their tax right first time, and to bear down on tax evasion.

"While HMRC already has the power to access information from UK-based platforms on the income of sellers on the platform, implementing the OECD rules will enable HMRC to exchange information with other tax authorities to access data from platforms based outside the UK quickly and efficiently."

HMRC said the changes are likely to affect between two and five million businesses who provide their products or services via digital platforms. It includes the provision of taxi and private hire services, food delivery services, freelance work and the letting of short-term accommodation.

There is also expected to be "a significant impact on UK digital platform operators who will have to collect specific pieces of information about sellers, which some platforms will not already collect".

They will be required to "verify that information, collate and report it to enable the seller to be identified and matched with data HMRC holds, identify the residency of the seller and the jurisdiction in which a property is located".

HMRC also said the measure is "likely to increase customer costs for some of the businesses affected", and the government is "working to understand these costs and the scope of any impacts better" with an "update at a future fiscal event". The next "fiscal event" is the Autumn Statement on 22 November.

Commenting on the changes, Daniel Woolf, head of policy and government relations at Enterprise Nation, said:

"The plan will concern entrepreneurs across the UK. HMRC's analysis acknowledges that the measure is likely to increase customer costs for some of the businesses affected. It could also lead to platforms increasing the fees they charge businesses as they adapt to the new requirements.

"As Enterprise Nation has previously argued, official government data often doesn’t consider entrepreneurial activity and how it boosts the UK economy. Working with business groups and online marketplaces is the perfect way to close that data gap, but it needs to be done in a way that doesn’t lead to unnecessary burdens.

"Entrepreneurs and people with side hustles create value and contribute to economic growth. These innovative workers utilise powerful digital platforms to sell their products and services across the world.

"Against the backdrop of the cost of living crisis, and the high tax burden facing businesses, HMRC should consider the potential unintended consequences of increasing the tax burden on those trying to boost their income.

"We need a healthy pipeline of fresh new businesses to support economic growth, increase innovation and add diversity to the UK's small business community. We need to be ready to support them to develop the skills they need to thrive."

Relevant Enterprise Nation resources

Free guide: How to start a side hustle

How to sell your products and services through online marketplaces

Selling on online B2B commerce marketplaces

Lunch and Learn: What the future for e-commerce means for small businesses