2024 marked the first year that digital platforms such as Amazon and eBay were required to report information about vendors to HMRC. The reporting requirements apply unless the vendor made fewer than 30 sales in a year and received less than €2,000 (approximately £1,700) from those sales.

The new rules simply enhance HMRC’s data collection powers and do not introduce any new tax obligations for individuals. However, they do increase the likelihood that HMRC will identify online traders who have not been declaring their income.

There has been widespread misinformation online and on social media regarding the new rules, with many believing they will have to pay tax on sales made from clearing out unwanted possessions. This is not necessarily the case. In a recent educational campaign, HMRC clarified the circumstances in which tax would be due. They explained, “Selling stuff for some extra money might just feel like a fun hobby you do on the side, but it could also count as something HMRC calls ‘trading’.” The definition of trading is complex, but generally, it applies when an activity is carried out with the intention of making a profit. HMRC further stated, “Just casually selling some unwanted personal belongings from time to time? It’s unlikely you’ll need to pay any tax on this.”

The campaign also highlights the £1,000 trading allowance. If a person’s sales income from trading is £1,000 or less in a tax year, that income does not need to be declared. However, if sales from trading exceed £1,000, the income must be reported on a self assessment tax return.