Beginning 1st January 2024, digital platforms like Etsy, Airbnb, and Uber will start collecting information about their users’ earnings from selling goods and services. While HMRC could request this information before, the new digital platform reporting rules now mandate these platforms to gather this data from 2024 and report it starting January 2025.
What is a digital platform?
A digital platform, for these purposes, includes software, websites, online marketplaces, and apps that connect sellers with users to provide goods and services.
Moreover, the new digital platform reporting rules target sellers using digital platforms for services like private hire, food delivery, freelancing, short-term accommodation lettings, and online marketplace sales. Also, these rules apply to anyone earning income through a digital platform, whether it’s renting a driveway or selling homemade items on Etsy. So, HMRC will receive sales data from these platforms.
Will HMRC know if I earn money online?
These measures extend beyond the UK, with HMRC planning to share data with other tax authorities. This will affect UK-based sellers who sell overseas and vice versa. However, the rules exempt ‘occasional’ sellers who make fewer than 30 sales or receive no more than €2,000.
Additionally, under the new rules, digital platforms are required to report users’ earnings if they meet specific sales volume or income criteria.
Furthermore, HMRC will use the reported data to match it to the correct taxpayer. For this, platforms might request additional information, like UTR numbers or identity documents.
Despite these changes, the obligation to submit tax returns remains unchanged. Therefore, if you’re required to submit Self Assessment tax returns, you should continue to do so, unless your situation changes.
Does this affect the trading allowance?
The new rules do not affect the trading allowance. If your total self-employed earnings are below the £1,000 trading allowance, you don’t need to register for Self Assessment or submit a tax return. Continue claiming tax relief on allowable expenses.
Digital platforms will provide you with a copy of the data they send to HMRC. However, be aware of the differences in reporting periods between platforms and Self Assessment tax returns.
Your responsibilities for recording and reporting income remain unchanged with the new rules. Ensure meticulous record-keeping of earnings and expenses and report income figures accurately.
Need more help with the new reporting rules for digital platforms? Reach out to our experts at Count for all the information and guidance you need!