HMRC has introduced new rules for all secondary market digital trading platforms that mean sellers on marketplaces like eBay and Chrono24 will have to provide tax information to those businesses.
In turn, that information will be shared with The Treasury so they can check whether the right amount of tax — if any — is being paid.
Reports this week have dubbed the new disclosure rules the “side-hustle tax”, but Julia Rosenbloom is a tax partner at Shakespeare Martineau who focuses on advising HNW individuals, says this is not a new tax, but it is a new set of reporting requirements designed to catch tax-dodgers.
While an added administrative headache for the digital platforms, and a potential turn-off for watch collectors who like the hassle-free simplicity of selling via online marketplaces, the rules are not designed to raise additional taxes from individuals who only occasionally sell online.
“It is really about ensuring bulk sellers are paying the right taxes, be that capital gains or income tax on their profits,” Ms Rosenbloom tells WatchPro.
From January 1, 2024, HMRC is insisting individual consumer sellers provide their National Insurance number to platforms like eBay.
If that seems intrusive, it is only half the story, the new rules have been agreed among OECD countries to ensure taxes are fairly paid in the country where sales are made.
Customer information, including national insurance numbers, are then shared internationally with the tax authorities where the digital platform is based.
Current tax laws say that there is usually no tax to pay unless an individual sells items worth more than £1,000 per year.
The new rules mean that online platforms have to tell HMRC about anyone selling more than 30 items per year that total in excess of £1,700.
Casual sellers are still unlikely to accrue any liabilities. Selling one-off watches is also exempt from capital gains tax.
“Disclosure is just to ensure people are paying the proper taxes, there are no additional taxes,” she adds.
An eBay spokesperson, responding to questions from WatchPro, explains: “In light of HMRC’s new tax reporting rules, eBay is working closely with our sellers to educate them on the changes, which won’t affect their existing tax obligations. We’ve launched online help and information pages outlining exactly what information we’ll need to collect, along with how their data is being robustly protected. We remain committed to supporting our thriving community and ensuring eBay remains a destination where users can safely and easily sell their items.”
Ha ha ha, always ahead of the game HMRC. No time like introducing it after the market’s tanked :)
I’m mocking them as a private seller, which I know won’t be their primary target with this move. A couple of years ago they could have caught out those avoiding CGT.