Sellers on Etsy, Vinted and ebay face tax crackdown

THE tax man has launched a new crackdown on “side hustlers” who make money from selling items online.

Millions of people using platforms such as ebay, Vinted, Etsy and Depop will now be under much greater scrutiny and could be forced to pay tax on their sales as a result.

Firms are now obliged to collect and share details of transactions with the tax authorities – paving the way for HMRC to snuff out tax dodgers earning more than £1,000 from online sales.

The new rules impact everyone from holiday rental hosts and freelancers, to sellers of handcrafted goods and people renting out their driveways.

Several platforms such as Airbnb already report users’ income details to HMRC, but more have now been brought into the fold, meaning sellers on digital platforms will be treated more like traditional businesses.

So-called side hustles have grown in popularity in recent years but people, intentionally or not, have been able to slip through the net and avoid tax.

HMRC, which is investing £37m into the project and employing 24 extra staff members, says the initiative will “help us detect any deliberate non-compliance”. The scheme has been introduced as a result of the UK joining a global effort run by the Organisation for Economic Cooperation and Development.

The first deadline for firms to report details of transactions is the end of January 2025 – a year after the rules come into force. Bank account details and the cost of transactions made by sellers with sizable trading activity must be reported. Firms will not be asked to share data about sellers who make fewer than 30 transactions or €2,000 (£1,735) a year.

Using the “trading allowance”, everyone can earn up to £1,000 in additional income not captured by the PAYE system each tax year. Anything which exceeds the tax-free threshold, needs to be reported to HMRC through selfassessment. Research by Barclaycard in 2022 found one in 12 people had extra sources of income, but that figure is thought to have grown in the past year.

Mike Parkes, technical director at Gosimpletax, warned that online sellers need to be wary.

“Earning £1,000 in a year might seem like a large amount, but that can easily be exceeded if you earn more than £84 a month across a year,” he said.