People who use selling platforms such as eBay and Vinted could be contacted by HMRC by the end of this month.
From the start of this year, new rules came into force which mean selling platforms must report certain details about sellers – such as how much they make – to HMRC to ensure those who should be paying tax on their earnings are doing so.
Platform operators have to let sellers know when they have reported your details to HMRC. The deadline for sellers to report sellers’ details is January 31.
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HMRC says: “The information is meant to help you to keep track of your earnings. It might also help if you need to tell HMRC about your income or send a tax return. These reports do not replace your normal business records or tax calculations.
“The report will show you the total amount that you have earned on the platform for the calendar year, less any fees, commission or taxes deducted by the platform. The amounts will be broken down into quarters of the calendar year. You’ll need to consider the types of taxes the platform has deducted to see if you can offset these against any tax due.”
HMRC says anyone who has made more than 30 sales in a year, or made more than £1,700, will be contacted. However, this does not automatically mean that you will have to pay tax on the earnings.
The only people who need to pay tax on their earnings are those who are trading or making a capital gain. HMRC states: “You’re unlikely to pay tax if you sell personal items from your home, like contents of a loft or garage. If you buy or make goods to sell at a profit, you’re likely to be trading and will have to pay tax on your profits.”
According to HMRC, personal items count as items that belong to you for your own use that you may have bought yourself or received as a gift. For example things like clothing, ornaments, kitchen equipment, table and chairs, jewellery, computers and phones could count as personal items.
However, your selling might count as trading if you bought the items with the intention of selling them for profit, or if you made them yourself. If you are trading, you may be required to pay income tax on your earnings.
You can check if you need to tell HMRC about your income on the gov.uk website here.