Engaged in the clothing industry for 20 years.
Fashion re-sellers must report sales to tax authorities
Individuals engaged in online side businesses such as reselling fashion and accessories, can anticipate increased scrutiny from tax authorities, with platforms such as Vinted and eBay now obligated to collect and share transaction details with HMRC as of January 1st.
These measures, aligned with international efforts led by the Organisation for Economic Cooperation and Development (OECD) to combat tax evasion globally, extend HMRC’s ability to pinpoint individuals generating additional income who may not be declaring it appropriately, reported the BBC.
Previously, HMRC could request information from UK-based online operators, but the new regulations set forth under the OECD mandate that digital platforms routinely report the income generated by sellers on their sites. The reporting scope encompasses various transactions, including the sale of handmade items, second-hand clothes, and freelance services. Information sharing will occur among countries adhering to the OECD tax rules.
The UK government asserts that these regulations will strengthen efforts to combat tax evasion, treating online sellers more akin to traditional businesses. An HMRC spokesperson told the BBC that the rules aim to support accurate tax reporting by online sellers, providing a mechanism to detect deliberate non-compliance and ensuring equitable treatment of all taxpayers.
Starting January 2025, companies must fulfil their reporting obligations to HMRC, submitting information such as tax IDs, bank account details, and transaction values and volumes for sellers with significant activity, said the BBC. Notably, under OECD guidelines, firms are not required to share data for sellers with fewer than 30 transactions or generating less than 1,735 pounds. annually.
Individual sellers also do not need to pay tax on personal possessions with a value of less than 6,000 pounds, according to data found on the HMRC website.
“Side-hustles” to be taxed
The BBC said the focus is on individuals operating a “side-hustle” profiting from the sale of second-hand items, and any applicable taxes are contingent on the sellers’ unique tax situations.