Understanding the January 31st Deadline: Online Sellers Tax Rules
The end of January wasn’t just the deadline for personal tax returns; it also marked the beginning of a new era of tax reporting for online sellers. As of January 2025, online platforms like eBay, Airbnb, and Vinted are now required to provide HMRC with data on their users’ 2024 sales. This new reporting requirement, while originating from OECD model rules published in 2020 to combat tax avoidance through digital platforms, is a first for these platforms.
Dispelling the Myths
Initial news of this reporting sparked some misleading media coverage, with headlines suggesting a new “eBay tax.” HMRC quickly clarified the situation with a press release titled “No tax changes for online sellers.” While technically accurate – the underlying tax rules haven’t changed – the reporting requirement may prompt HMRC inquiries for some sellers. Therefore, understanding the rules is crucial.
Who is Affected and What Information is Shared?
HMRC will receive reports from platforms only if, during 2024, a user met either of the following criteria:
- Sales of at least €2,000 (approximately £1,700); or
These reports aren’t directly related to personal tax liability, but they may trigger HMRC to investigate whether a liability exists. Simply selling unwanted personal items isn’t a taxable activity. HMRC is primarily interested in individuals who are:
- Trading: Buying items for resale at a profit; or
- Providing services: Such as van driving or property rentals.
These activities have always been taxable, hence HMRC’s “no change” stance. However, even with trading or rental income, you might not owe any tax if:
- Your total gross trading/services profit (before expenses) is no more than £1,000 per tax year; and/or
- Your total rental income (before expenses) is also no more than £1,000 per tax year.
These £1,000 annual allowances for trading and property income are often overlooked. They serve to reduce HMRC’s administrative burden as much as they benefit taxpayers. As always with tax matters, understanding the details can be extremely beneficial.
Navigating the changing tax landscape for online sellers can be complex. Whether you’re already running a successful online business or just starting out, sound financial planning is key. Chartwell’s expert advisors can help you understand your tax obligations, optimise your finances, and achieve your business goals. Contact us today for a consultation.
Tax treatment varies according to individual circumstances and is subject to change.
The Financial Conduct Authority does not regulate tax advice.
