Tax experts try to reassure over new HMRC reporting rules for online deals

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Tax experts have taken to social media in an effort to reassure panicking UK gig economy workers and online sellers over new reporting rules affecting the digital platforms they use.

Under regulations that came into effect on January 1, platforms such as Amazon, Airbnb, Deliveroo, eBay, Uber and Vinted will be required to collect and report seller information and income to the UK tax authority. The first reports will be sent in January 2025.

The regulations are part of an international reform agreed in 2020 and spearheaded by the OECD, and have come into force in a number of countries. Platforms will not be required to report the details of those using their sites or apps who make 30 or fewer sales a year and sell items for less than a total of €2,000 (approximately £1,700).

The circumstances in which a person needs to declare and pay UK tax have not changed but the new reporting rules have nonetheless caused alarm among those who use the platforms, with some dubbing them a “side hustle tax” on social media.

One commentator on X said: “This is . . . outrageous . . . Tax is already paid upon original purchase of these items, so why do people need to pay again, and how can the gov justify this?”

Although HM Revenue & Customs took to X to challenge “myths” around the rule changes, it failed to fully reassure panicking gig economy workers and online sellers.

Martin Lewis, the consumer champion and founder of the Money Saving Expert advice website, said he had received hundreds, “if not thousands” of queries about the changes this week.

“There’s been a lot of misinformation and panic and confusion on social media and I think that’s been amplified by some media articles I’ve read that have misunderstood what’s happened,” he said.

He explained the changes in a post on X: “Many are worried after reports that Etsy, eBay, Vinted etc will start automatically passing sales info to HM Revenue. To set your mind at rest, best to read our full guide.”

Lewis added that several people told him they planned to stop selling their old items online because of the rules, which would be “bad for the environment and for people’s pockets” particularly in a cost of living crisis.

Meredith McCammond, technical officer at the Low Incomes Tax Reform Group, an educational tax charity, said there had been little outreach to gig economy workers and sellers around the new rules.

“Because of that vacuum, people could quite easily take the rules the wrong way resulting in widespread chaos and confusion,” she said. The charity has posted its own guide to the rules.

Emma Rawson, technical officer at the Association of Taxation Technicians, a professional body, posted on X that she was “genuinely concerned about the unnecessary levels of worry reporting on this is causing”.

The ATT posted its own online guidance about the rules, and Rawson said that while people reselling their old items would not generally be liable for tax, the changes would make it harder for anyone who has not reported their tax properly to HMRC to continue evading their liability.

HMRC told the Financial Times that “for people selling personal possessions online, absolutely nothing has changed”.

“The reason we’re asking digital platforms to share information with us is to ensure businesses operating via these platforms pay the correct amount of tax, and do not have an unfair tax advantage over high street and other traditional businesses,” it said.

Additional reporting by Cristina Criddle