HMRC's new reporting rules for online marketplaces

The internet has made it easier for people to make money online, whether it's selling things on Etsy or renting out properties on Airbnb. But this also means more people need to pay taxes on their online earnings. To make sure everyone is following the rules, HMRC has introduced new rules requiring these online marketplaces to report details of sellers and their transactions to the HMRC, making HMRC easier to track taxes on these earnings. ​

As of 1st of January 2024 HMRC introduced new requirements for online marketplaces to report sellers' earnings directly to them. Under this new regulation, platforms such as delivery services, e-commerce websites, freelance platforms, and property rental apps will be required to submit detailed reports of their users' earnings.​

This means that if you’re selling goods, renting out property, delivering food, driving a taxi, or providing freelance services through digital platforms, there’s a good chance your earnings will now be reported directly to HMRC. The first reporting period covers income earned during the 2024 calendar year, so platforms will begin sharing seller information for the period ending on 31st of December 2024.​

If you are earning income through an online marketplace, it’s important to be aware of these new requirements and ensure that you are accurately reporting your earnings to HMRC. This shift means there will be increased transparency, as HMRC will have access to more detailed data about sellers' earnings. Failing to report income properly could lead to penalties and additional scrutiny from HMRC.​

Whether you’re an occasional seller or running a full-time business, you are responsible for paying the correct amount of tax on your earnings. Many sellers may have previously underestimated the need to file returns or pay taxes on their income, especially if they considered it “side income” or infrequent. However, under these new reporting rules, HMRC will be receiving the data directly from the platforms, meaning it will be harder for income to slip under the radar.​

The new reporting obligations apply to a wide range of digital activities, including but not limited to:​

Whether you are a casual seller or someone using these platforms as a primary income source, the rules are the same: if you earn over £1,000 during the tax year, this must be declared to HMRC.​

If you’ve earned income through online marketplaces in 2024, the short answer is: probably, yes. There are some thresholds to consider. For example, you are allowed to earn up to £1,000 tax-free under HMRC’s trading allowance or property allowance. If your income is below this £1,000 threshold you don’t need to report this to HMRC. However, if your income exceeds these limits, you are required to file a tax return and potentially pay taxes on the additional earnings.​

Please note, this £1,000 threshold applies to income - not profit (income less expenses).​

Even if your earnings fall below the £1,000 threshold, it’s still wise to check with an accountant to ensure you’re compliant. The last thing you want is to be caught off guard by HMRC. If you’re not working with an accountant, book a call with one of our team members to discuss.​

If you are a seller on an online marketplace, there are a few important steps you should take:​

With HMRC’s increased focus on transparency in the digital economy, it’s more important than ever to ensure that you’re correctly reporting all of your income. Failing to do so can lead to penalties, interest, and even more significant issues if HMRC conducts an investigation. It’s always better to be proactive and get your tax affairs in order.​

Need a helping hand? At Beany, we specialise in making accounting and tax a breeze. Our team of experts can handle your tax compliance so you can focus on what you do best – running your business. Let Beany be your trusted accounting partner. Get in touch with us or register today.​