HM Revenue and Customs (HMRC) has issued a warning to users of online selling platforms such as eBay, Vinted, or Facebook Marketplace. The new regulations, introduced earlier this year, come in response to the surge in the popularity of these sites. Digital selling platforms are now mandated to collect and provide transaction details to HMRC. This has caused some confusion among individuals selling personal items on these platforms, regarding whether they will be required to pay income tax on the money they earn.
An official alert from HMRC posted on X, formerly Twitter, aimed to clarify the issue for users. The message stated that there have been speculations about new rules requiring online marketplaces to share specific details with HMRC and its implications for taxpayers. The post emphasized that there have been no changes to tax rules for individuals using online marketplaces to sell personal items like used clothes, old TVs, or unwanted furniture. It reassured sellers that selling personal items does not classify them as traders.
However, additional guidance on Gov.uk highlights that some individuals may indeed need to pay tax. The guidance states that individuals must be trading or making a capital gain to pay tax on the goods or services they sell online. If an individual buys or creates goods for the purpose of selling them at a profit, they are likely engaged in trading and will be liable to pay tax on their profits.
Furthermore, selling platform operators are now required to report transaction details to HMRC. This information is collected annually and submitted to HMRC by the following January. If you make fewer than 30 sales or receive less than around £1,700 from those sales, your information will not be reported. HMRC will share your details with your country’s tax authority if you reside in a country that follows these regulations. The advice from HMRC also specifies that individuals do not need to pay tax on the sale of personal items amounting to less than £6,000.
In conclusion, sellers on online platforms need to be aware of the changing regulations regarding tax obligations on their earnings. HMRC’s clarification seeks to address uncertainties and provide guidance to individuals engaged in selling personal items online to ensure compliance with tax laws.