Effective from January 1, a new rule mandates these platforms to record and report users' income, resulting in increased scrutiny for anyone reselling items on platforms like Vinted or providing services through Fiverr and Upwork.

in a bold move to combat tax avoidance, HMRC has launched a crackdown on individuals earning money through popular platforms such as eBay, Vinted, and Airbnb. This blog aims to explain the possible implications for individuals making money through such avenues.

New Year, New HMRC Crackdown

Under this latest initiative, websites are obligated to disclose how much income their users generate, creating a transparent financial landscape. HMRC will then compare this data with the self-assessment reports submitted by individuals. This allows the tax office to identify discrepancies and launch investigations if there are suspicions of tax avoidance.

To enforce these measures, HMRC is investing a substantial £37 million and employing 24 full-time staff. Platforms affected by these changes include not only Vinted, eBay, and Airbnb but also freelancing platforms like Fiverr and Upwork. The objective is to target individuals who under-report or fail to report their earnings in an effort to create a fairer tax system.

The New Rules: What You Need to Know

For those engaged in side hustles, the Trading Allowance provides a buffer of £1,000 in additional income annually without the need for self-employment registration. However, individuals surpassing this limit must register as self-employed and fulfill their tax obligations on the earnings made through these platforms.

Understanding the Trading Allowance

HMRC's crackdown is part of a broader effort to tackle tax avoidance in the gig economy and self-employment sector. The focus is on individuals who might be under-reporting or avoiding tax obligations altogether. Adhering to the rules is crucial to avoid investigations and penalties.

In light of these changes, individuals who rely on platforms like eBay, Vinted, or Airbnb for their side hustles are encouraged to seek support and advice from trusted tax professionals. At The Tax Faculty LLP, we are ex-HMRC tax specialists known for our expertise in navigating complex tax regulations and with a proven track record of supporting our clients in all areas of their tax affairs.

Why Compliance Matters

Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023

The Finance Monthly Taxation Awards recognises the achievements of tax professionals from around the globe.

Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.

Read more about Charles and the award here.

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