HMRC cracks down on 'tax-evading' second-hand online sellers and side hustlers

3 January 2024, 10:15 | Updated: 3 January 2024, 10:18

Sellers on eBay and other online marketplaces are being targeted by new HMRC rules.
Sellers on eBay and other online marketplaces are being targeted by new HMRC rules. Picture: Alamy

By Ana Truesdale

New HMRC rules target 'side hustles' on online marketplaces by obtaining the financial data of sellers who are underreporting their income and evading tax.

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The new rules were put in place on January 1 and are part of a wider crackdown on tax evasion among people who boost their income from online platforms like eBay, Etsy, and Vinted.

Sellers who do earn more than £1000 a year will have to register as self-employed and file a self-assessment tax return.

The first deadline for tax self-assessment is the end of January 2025.

You can check whether you need to register as self-employed under the new rules using the government website here.

Online sellers who earn more than £1000 a year must register as self-employed
Online sellers who earn more than £1000 a year must register as self-employed. Picture: Getty

HM Revenue & Customs already had the power to request sellers' financial data from online platforms.

Now under the new rules, online marketplaces like eBay will directly report sellers' financial data to HMRC.

The government will be able to spot discrepancies between the sellers' data from online platforms and the individual's tax report.

Any discrepancies and HMRC would have grounds to launch an investigation.

Read more: UK house sales tumbled by a fifth in October, HMRC says

Read more: Some Etsy sellers ‘ripping off’ customers over ‘handmade’ products, Which? says

Sellers who make fewer than 30 transactions or €2000 (£1735) a year will not have their data shared.

Financial data HMRC would collect includes tax ID, bank account details, and the number and amount of transactions made by the sellers.

The rules affect food delivery and taxi hire as well as people who sell handcrafted and second-hand items.

Platforms like Airbnb, Fiverr and Upwork will also fall under the new rules.

The people on these platforms who are most impacted are those who haven't already been declaring their additional income or those who are currently underreporting their online earnings.

People who occasionally sell second-hand clothing on websites like Vinted are not likely to be affected by the new rules.
People who occasionally sell second-hand clothing on websites like Vinted are not likely to be affected by the new rules. Picture: Getty

HMRC says people who occasionally sell a second-hand item online are not likely to owe any tax.

An HMRC spokesperson said: "These new rules will support our work to help online sellers get their tax right first time. They will also help us detect any deliberate non-compliance, ensuring a level playing field for all taxpayers."

One Vinted seller told Mail Online: "I'm a Vinted seller- I sell mine and my children's used items however I would say I probably made about £1500 last year doing this as I buy good quality clothing which holds a fair amount of value.

"I have then used the money to buy more things we need or Christmas presents etc.

"I don't make profit - I'm selling our old items usually at a loss as they are used or unwanted. I find it incredible that the government then think they can tax that money when I've already paid tax on my wages as has my husband!"

They added: "'It's a double tax on hard working people, yet inheritance tax for people inheriting over 325k has been abolished?

"Something is seriously amiss here and the government need to get their priorities in order."

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