HMRC is expected to implement new tax rules starting January 1, 2024, targeting sellers on online shopping platforms.
According to the new rules, online shopping platforms must record sellers’ income and report it to HMRC, thereby addressing tax evasion to some extent.
In a few weeks, online sellers will directly experience this change.
Tax Rule Details
Under HMRC’s new rules, some online shopping platforms (such as Vinted and Etsy) are responsible for recording seller details and transferring them to the authorities.
The platforms’ first reporting deadline is January 31, 2025.
The report will include details such as the seller’s place of residence and identification information.
If the platform fails to accurately and completely record seller information, it will face significant fines and penalties.
Specific Impacts
This new measure is expected to affect digital platforms and millions of online sellers, although HMRC claims the impact is minimal.
The regulation will help HMRC combat tax evasion issues and require taxpayers to pay taxes correctly.
Once the new tax rules take effect, HMRC will have the authority to obtain seller information from UK digital platforms.
In addition, HMRC will exchange information with other tax authorities and obtain more information from platforms outside the UK.
Impact on Online Sellers
In reality, there is not much impact on all tax-compliant online sellers.
Because this regulation primarily assists HMRC in checking the actual taxes owed by taxpayers, rather than adding complexity.
However, if sellers fail to comply with tax obligations, they will face penalties from HMRC in the future.
This is especially crucial for taxpayers who engage in online transactions as a side business, making accurate income tax reporting particularly important.
