Understanding HMRC's New Digital Platform Reporting Rules for Online Sellers
From 1 January 2024, HMRC's updated regulations require automatic data sharing between UK and international digital platforms and the tax authorities. This stems from the UK's commitment to OECD standards aimed at combating tax evasion globally.
Digital platforms, defined as online marketplaces, websites, and apps facilitating third-party sales, must now report seller data to HMRC. This includes platforms like eBay, Etsy, UberEats, Airbnb, and others, but excludes businesses selling their own products exclusively.
The new rules apply to all digital platforms tax-resident in the UK. They must report seller information, including earnings and personal details, irrespective of the seller's tax residency. This data helps HMRC verify income declarations on Self Assessments.
Key points include:
- Reporting Timeline: Platforms start collecting seller data from 1st January 2024, reporting to HMRC by 31 January 2025 (23/24 Tax Year)
- Data Shared: Personal and business details, earnings, fees, property addresses, and bank account information.
- Impact on Sellers: All UK taxpaying individuals and businesses using these platforms are affected. International tax authorities will exchange data for sellers resident in their jurisdictions.
- Occasional Seller Exclusion: Sellers with fewer than 30 transactions or less than €2,000 (about £1,700) income in a year may be exempt from reporting.
- Tax Obligations: Sellers must declare income from online sales if it's earned through a trade. Those selling personal items occasionally may not need to register for Self Assessment or pay tax unless it's a regular trade.
For clarification or advice on these regulations, book an appoitment with us.