Resale platforms such as eBay, Etsy, Amazon and Vinted must now share seller information with HM Revenue & Customs (HMRC) as part of a crackdown, dubbed the ‘side hustle tax’.
According to HMRC, the action will level the playing field for how traditional firms are treated for tax reasons and enable tax authorities to identify and combat tax cheating. It coincides with several other tax adjustments for the beginning of 2024, such as adjustments to the national insurance premium that employees must pay.
Online vendors who make more than £ 1,000 a year from so-called side gigs are required to register as self-employed and submit a self-assessment tax return at the end of the fiscal year.
Although HMRC was already able to request data from digital platforms located in the UK, the UK has agreed to new regulations through the Organisation for Economic Cooperation and Development (OECD) that went into effect at the beginning of this year. These regulations allow HMRC to share data with other tax authorities in order to access data from platforms located outside of the UK.
Online retailers will have to provide HMRC with seller data immediately, however not until the end of January 2025. This will contain data such tax identification numbers, bank account information, and the volume and quantity of transactions done by sellers who engage in significant trading.
It will apply to digital apps and platforms – including website providers to third-party sellers – and cover the sale of goods and services, such as handmade or second-hand clothes and items.
The so-called ‘side hustle tax’ arrangement is not unique to the UK with countries, such as the United States and Australia introducing similar measures.
