New UK tax rules on side hustles like eBay and Vinted may lead to “nasty surprises”. Sites have until end of the month to tell HMRC how much money users have made but confusion surrounds the new system from the Labour Party government.
The Low Incomes Tax Reforms Group (LITRG), a charity, said that more people might now have to file tax returns, but using information they find hard to manage, with the self assessment deadline just two weeks away now.
Meredith McCammond, a technical officer with the LITRG, said that just one quarter of the tax data that people will receive – from January to March 2024 – will be relevant to people filling out a tax return this month, on January 31.
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Sellers have to tell HMRC if someone makes more than £1,700 in a year, or completes 30 transactions, under new rules. But Dawn Register of the accountancy firm BDO warned: “But it will be enough to identify if an individual has been trading – and to launch a tax investigation if there are high turnover numbers.
“The new rules may well mean that there are some nasty surprises in store for people who are either ignorant of the rules or trying to get away without paying tax on their trading earnings.” Ms Register went on, adding in her warning to UK Vinted sellers, and those who use the likes of Facebook Marketplace, Etsy, Airbnb, EBay and Depop and more: “There may also be some surprises for HMRC when they see how much some people are earning from online platforms.”
A spokesperson for HMRC said in a statement over the new rules: “For people selling personal possessions online absolutely nothing has changed. If you aren’t trading and just occasionally sell unwanted items online there is no tax due.”
“The lack of guidance terrified people and chaos ensued when they thought HMRC will come to tax the extra cash they made by selling unwanted Christmas gifts,” said Miruna Constantin of accountants RSM UK. “HMRC has now issued detailed guidance helping individuals determine whether they need to declare income received from selling personal possessions, goods or services online or renting out property using digital platforms.”