Selling online? Are you declaring the income?

Numerous individuals utilise online trading platforms to sell unwanted items, or potentially offer space in their homes for rent.

If you are generating income through such activities and your earnings exceed £1,000 in any given tax year, it is essential to disclose these earnings to HMRC.

This matter is anticipated to gain prominence, as starting from 1 January 2024, HMRC will collect data from trading platforms. They will use this information to identify traders who have not reported their earnings.

As outlined in HMRC’s manual on this subject:

“The reporting rules commence in the United Kingdom on 1 January 2024.

“Platform operators that are within the scope of the rules will have to start conducting the due diligence, record keeping, and other obligations specified in the regulations from 1 January 2024.

“The required information must be reported by 31 January following the end of the reporting period. This means the reports for the first Reportable Period of 1 January 2024 to 31 December 2024 will be due by 31 January 2025.”

This implies that details of your online sales will now be submitted to HMRC by individual trading platforms. If HMRC finds discrepancies between actual taxpayer returns and the data received from platforms like eBay, Amazon, Airbnb, etc, enquiries may follow.

It is crucial to emphasise that if your online sales (that’s sales, not profit) do not exceed the £1,000 tax-free limit in any tax year, you have no reporting obligations. However, it’s important to note that this £1,000 limit applies to the total revenue from all your online sales platforms, not each platform individually.

If you require clarification on whether your online income is reportable, feel free to contact us, and we will assist you in determining if any declarations need to be made to HMRC.