As per a new rule by the UK taxing authority, HMRC (His Majesty’s Revenue and Customs), online companies, including apps and websites like Vinted and eBay, will share the financial details of sellers. This is a mandatory requirement, and all such online companies must follow this rule from January 1, 2025.
The rule aims to ensure tax compliance from individuals earning through side hustles, ensuring they pay the correct amount of tax. Those who fail to declare their earnings to avoid taxes will be impacted by this new measure.
A Side Hustle: What is it?
Individuals or businesses often take on extra work or provide additional services alongside their main occupation or primary income source. This is known as a side hustle. Common examples include freelance writing, selling goods online—especially handmade or second-hand products—or delivering takeaway food.
Side hustles are particularly common among people or businesses struggling to earn enough money for a decent living due to rising living costs.
HMRC’s new rules for side hustles
After the United Kingdom became a part of the Organisation for Economic Cooperation and Development, new tax rules were introduced. The objective is to investigate people who earn from companies based outside the UK.
Online companies like Airbnb, eBay, Etsy, Vinted, etc., are now required to share the online income details of their users with HMRC. While the tax authority could previously request this information from UK-based websites, the new rules expand the scope to include foreign-based platforms starting January 1, 2025.
The financial report should include the following information:
- The bank account details of the user
- A minimum of 30 transactions, or
- Income above a certain threshold.
If the user is a resident of any other country besides the UK, such details can be shared with the concerned tax authorities in that country, too.
As per the rule, websites must initiate this process of sharing information by January 31, 2025; otherwise, they will be penalised by the HMRC.
Which Sellers Will HMRC Target?
HMRC is not interested in collecting details from sellers who don’t need to pay tax, as everyone is allowed an annual trading allowance of £1,000.
There’s also a property allowance that lets you earn £1,000 tax-free from monetising your home.
HMRC is interested in your financial details if you are selling goods online at least 30 products or earning about £1,700 annually.
As a side hustler, if your income is more than £1,000, you must go through the self-assessment process. HMRC will calculate the tax amount based on your full-time and part-time employment details and the tax amount that you have already paid.
If the side hustle income takes you into a higher tax bracket, you will need to complete tax compliance at that rate.
As before, we want to reaffirm that if you owe tax, make sure to pay it on time to avoid penalties, and you may also incur interest on any outstanding amount.
Need help with filing your tax returns or any other tax-related matters? Connect with us at Cangaf Accountants today.
More Links
1. HMRC Late Payment Interest Rates to Increase from 6 April 2025
HMRC announced that interest rates on late tax payments will increase from April 2025. This aligns with the Bank of England base rate and is aimed at encouraging timely payments.
2. 300,000 People Taken Out of Tax Returns – A Boost for Side-Hustlers
A major simplification in tax rules means up to 300,000 people—many with side incomes—won’t need to file self-assessment returns anymore, easing administrative burdens.
3. HMRC App Sees Record Growth with 2 Million New Users
The HMRC app hit record use in 2024, with new features enabling people to check tax codes, view summaries, and make payments on the go.
