New rules target people not declaring income from side hustles

New rules mean firms including eBay, Vinted, Etsy and Airbnb are now required to collect and share details of people selling goods and services through their websites with HMRC.

This will allow HMRC to crackdown on people earning extra money from side hustles but not declaring it.

Although HMRC was already able to ask for information from UK-based online operators, on 1 January new rules came into force that mean digital platforms have to routinely report the income sellers are getting through their sites.

The rules, introduced via the Organisation for Economic Cooperation and Development, apply to sales of goods such as clothing and for services such as taxi hire, food delivery and holiday lets.

Firms will have to report information to HMRC for the first time at the end of January 2025. The information they’ll have to provide includes tax IDs, bank account details, and the value and volume of transactions.

Do I need to be worried?

If you're selling personal items to declutter your home, you don't need to pay tax on the money you make. It's only if you're specifically buying or making items to sell on that you need to report your earnings.

Even if you're just decluttering though, it's good practice to keep a record of anything you sell so that you can give this information to HMRC should they ask for it.

HMRC are likely to look out for certain signs to spot if you're selling your own stuff or specifically buying to sell on. For example, are you selling clothes in a wide range of sizes? 

Under the new rules, firms will not be asked to share data about sellers who make fewer than 30 transactions or £1,735 a year.

Having said that, if you're trading (as opposed to simply decluttering) you should be declaring anything you make over £1,000. If you’re earning less than £1,000 a year, you probably don’t need to complete a tax return but it's a good idea to keep records of what you sell and any expenses you incur in case HMRC ask for this information.

If you’re trading and earning above the £1,000 threshold and aren't registered for self assessment, don't panic, just contact HMRC and ask them what you need to do. They're likely to look favourably on people who were unaware they needed to declare income and take steps to put things right.