New tax rules require eBay sellers to report earnings as HMRC tightens regulations

In the UK, new tax rules are set to come into effect starting January 2025, mandating that online platforms, such as eBay, Vinted, and Depop, share their sales data with HMRC for tax purposes. Previously, HMRC had to actively request this information, but the upcoming changes require these platforms to provide sales data directly. This change is significant as it aims to enhance tax compliance among individuals selling goods online, particularly those who may have been under-reporting their earnings. Angela MacDonald, HMRC’s Second Permanent Secretary, emphasized that individuals selling unwanted items from their homes are unlikely to face tax liabilities unless they exceed a certain trading allowance. If individuals are deemed to be trading and exceed this allowance, they will be required to complete a self-assessment tax form. The importance of distinguishing between selling unwanted items and trading for profit is crucial; individuals who engage in occasional sales without the intent of generating profit typically are not liable for taxation. The trading allowance provides a safety net for those who sell personal items, allowing them to earn a set limit without tax implications. Understanding this distinction is essential, especially as the new regulations will affect many individuals who use online platforms to declutter their homes or offset costs by selling second-hand items. While the focus is on encouraging compliance among those who actively engage in selling for profit, HMRC also intends to provide clarity and assistance for occasional sellers. In preparation for the forthcoming changes, it is advisable for individuals selling items online to be aware of their obligations, particularly if their selling activities increase. Those who believe they might be classified as trading should be proactive in notifying HMRC and preparing to complete the necessary tax forms. The policy reflects a broader trend of increasing scrutiny on self-employment and income reporting, aimed at ensuring fair tax contributions from all sectors of the economy.