'Side hustle tax': Rules require online marketplaces to share sellers' income details with HMRC

'Side hustle tax': Rules require online marketplaces to share sellers' income details with HMRC
Dan Martin
Dan MartinDan Martin Content & Events

Posted: Tue 2nd Jan 2024

Platforms like Amazon, eBay, Vinted, Etsy and Airbnb are now legally obliged to share how much income sellers make with the UK tax authorities.

As part of the government's effort to clampdown on tax evasion, HM Revenue & Customs (HMRC) has signed up to global rules from the Organisation for Economic Cooperation and Development (OECD) which allow tax officials to share information with their equivalents in other countries.

As well as websites used to sell products such as Amazon and eBay, it also covers platforms and app which allow the provision of taxi and private hire services, food delivery services, freelance work and the letting of short-term accommodation.

Although HMRC was previously able to request information from online marketplaces, the new regulations, introduced on 1 January, mean that all relevant websites operating in the UK must now routinely report information such as sellers' bank account details and the value of transactions.

Official collection of the information began on New Year's Day with the deadline for the first report on 31 January 2025.

An HMRC spokesperson told Sky News:

"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.

"The rules will also make it easier for sellers on these platforms to comply [with tax laws] and will help HMRC to detect and tackle tax evasion when they do not."

Who is affected by the reporting rules for digital platforms?

Online marketplaces are used by many full time business owners but they are also accessed by people running side hustles, which is trading to earn income alongside another job. Examples are people selling second hand clothes on Vinted or renting out a property using Airbnb.

The OECD rules state that marketplaces don't have to share details about sellers making fewer than 30 transactions or making €2,000 (£1,735) a year. However, under UK tax rules, if you earn self-employment income over £1,000 a year, you must register as a sole trader and submit an annual Self Assessment tax return.

People renting out a room on sites like Airbnb can also use the ‘rent a room scheme’ which allows you earn up to £7,500 per year tax-free from letting out furnished accommodation in your home.

The changes have been dubbed the ‘side hustle tax’ but no new tax is being introduced.

Whether you have to pay tax on your side hustle is determined by whether you are classed as a a trader.

HMRC guidance says "if you regularly sell goods or services through an online marketplace you could be classed as a trader" and be subject to paying tax.

Someone who occasionally sells unwanted items online at the same or less than the original price with no intention of making a profit is unlikely to have to pay tax. However, people selling items to make a profit are likely to have to register with HMRC for Self Assessment.

You can check here if you need to tell HMRC about additional income.

Relevant resources:

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Dan Martin
Dan MartinDan Martin Content & Events
I'm a freelance journalist and event host who helps small businesses and the organisations that support them. I'm also Enterprise Nation's news reporter and Bristol Local Leader. I have 20 years of experience as a small business journalist having interviewed hundreds of entrepreneurs from famous names like Sir Richard Branson and Deborah Meaden to the founders behind brand new start-ups. I've worked for a range of leading small business publications and support groups, most recently as head of content at Enterprise Nation where I was responsible for the prolific output of content on the company's blog and social media. I now freelance for Enterprise Nation as the website's news reporter and as the host of the Small Business sessions podcast. I'm based in Bristol where I run and host regular events with the local small business community in my role as Enterprise Nation's Local Leader for Bristol. I also have strong connections with other major business organisations in the south west region. In total, I've hosted over 100 events including conferences with an audience of hundreds for international brands like Xero and Facebook and live web chats from inside 10 Downing Street. With my partner, I co-run Lifestyle District, a lifestyle blog focused on culture, art, theatre and photography.

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