Ecommerce platforms that allow people to sell second-hand goods will be required to report user earnings to HM Revenue and Customs (HMRC).
The new policy aims to secure tax revenue on income from the ‘side hustle’ of selling used goods on platforms like Depop, Etsy, eBay, Amazon and Vinted.
Sellers making more than £1,000 a year will be forced to be considered self-employed and file a return to the UK tax authority.
Under the new rules, digital platforms that host this activity will be required to provide HMRC with the financial data of its users to prevent second-hand merchants from failing to disclose the income source.
Details that will be shared include the number and value of transactions and user bank account information. Ecommerce firms that fail to comply will incur fines.
UKTN has reached out to affected ecommerce firms for comment.
Prior to the requirement, HMRC was already able to receive this information upon request.
The ‘side hustle tax’ will also apply to platforms that allow people to rent out their property, such as Airbnb.
“The rules will also make it easier for sellers on these platforms to comply and will help HMRC to detect and tackle tax evasion when they do not,” said an HMRC spokesperson.
The policy follows the UK’s agreement with the Organisation for Economic Cooperation and Development’s (OECD) initiative to encourage tax authorities to share information with international counterparts.
“Implementing the OECD rules will enable HMRC to exchange information with other tax authorities to access data from platforms based outside the UK quickly and efficiently,” the spokesperson added.