HMRC Now Gets Data From Amazon, eBay and Etsy. What Sellers Need to Know
Since January 2024, online marketplaces have had to collect information about their sellers and report it to HMRC each year. If you sell on Amazon, eBay, Etsy, Vinted or similar platforms, HMRC may already have figures for your sales.
This has been described online as a “new tax on side hustles”. It is not. The tax rules have not changed. What has changed is that HMRC can now see the income.
What the rules are
Under the UK’s reporting rules for digital platforms, platforms collect details of their sellers and report them to HMRC once a year. The first reports, covering 2024, were due by 31 January 2025. Platforms must also send each seller a copy of what has been reported about them.
Similar rules apply across the EU and in other countries, and tax authorities exchange the information. Selling through an overseas marketplace does not keep your sales out of view.
What is reported
For each seller, the report broadly includes:
- Your name, address and date of birth, or company details
- Your tax identification number, such as your National Insurance number or company registration number
- Your total sales in each quarter, and the number of sales
- Fees and commissions the platform charged you
- Bank account details used for payouts
Platforms do not have to report sellers of goods who made fewer than 30 sales and received no more than about £1,700 (€2,000) in the year. That exclusion is for reporting only. It does not mean income below it is tax-free.
Do you need to pay tax?
It depends on what you are doing, not on what the platform reports.
- Selling your own unwanted belongings is not usually trading. There is generally no income tax, although capital gains tax can apply to valuable items.
- Buying goods to resell, or making goods to sell, is usually trading, and the profit is taxable.
Individuals who are trading have a £1,000 trading allowance. If your total trading income before expenses is £1,000 or less in a tax year, you do not normally need to tell HMRC. Above that, you need to register for Self Assessment by 5 October after the end of the tax year and file a return.
Limited companies selling online are taxed on their profits in the usual way.
What HMRC is likely to do with the data
The obvious use is to compare platform figures with tax returns. Expect letters to sellers who have not registered, or whose declared income looks low compared with the platform’s figures.
Bear in mind that the platform reports gross sales. Your taxable profit is after fees, cost of stock, postage and other allowable expenses. A seller with large sales and modest profit has nothing to fear, provided the records support the figures.
What to do now
- Check the report your platform has sent you, and compare it with your own records.
- If you are trading and have not registered, do it now. Coming forward before HMRC contacts you usually leads to lower penalties.
- Keep records of what you paid for your stock, and download settlement or payout reports regularly.
- If you sell on more than one platform, add the sales together. HMRC will.
If you have received a letter from HMRC, or you think you should have been filing returns for earlier years, book a consultation. These situations are far easier to resolve early.
