HMRC issues new tax alert for anyone selling goods and services online | Personal Finance | Finance
HMRC has issued a new tax alert that highlights potential pitfalls for those running side hustles or selling goods and services online.
The tax authority has reminded sellers that while digital platforms may report their details, this doesn’t necessarily mean they will owe tax. However, if people are buying or making goods to sell at a profit, they might be considered traders and required to pay tax on their earnings.
In a recent post on X, HM Revenue and Customs (HMRC) stated: “Do you sell goods or services online? Digital platform operators in the UK might be required to report your details to HMRC.”
They clarified that “this is not a change to tax rules – platforms reporting your information to HMRC does not automatically mean you will owe tax.”
The post also explained that selling personal items, like those from a loft or garage, is unlikely to incur tax. However, if you buy or make goods for profit, you may need to pay tax.
Certain exemptions apply, such as for those making fewer than 30 sales or receiving less than €2,000 (about £1,700) from those sales.
This alert follows the UK’s adoption of the OECD Model Reporting Rules for Digital Platforms, which took effect on January 1, 2024.
How to report side hustle profits
Those who find themselves making significant profits from sales will have to declare them via a self-assessment tax return.
Rob Rees, divisional director at Markel Direct, the specialist insurer of freelancers and small businesses explained: “Although you may not feel like a business owner if you’re providing a service or selling goods online and making a profit of over £1,000 on the sale of items, you must declare it on your self-assessment and pay the correct level of tax.
“Tax returns can be unnerving, particularly for those who run a side business as a way to boost their income.
“However, under these new regulations, it is important to ensure your self-assessment is submitted by January 31, or you could face fines or penalties for filing late.
“Those newly impacted will have to submit theirs in January 2025, so it is best to start keeping a record of all transactions on online platforms to avoid a tax return headache closer to the deadline.”
