HMRC has new powers to crackdown and clamp down on people with side-hustles. Miruna Constantin, tax manager at accountancy group RSM, warns that HM Revenue & Customs is pioneering a new method of collecting information on people who sell second-hand clothes stuff online.
Constantin warned: “Selling that unwanted Christmas jumper? The taxman might be coming for you.” She added: “Whether you’ve been caught by the Marie Kondo urge to declutter and detoxify your wardrobe, are trying to get rid of a few pairs of designer shoes to make room for some new ones, or have built up quite a side hustle, you need to know the rules.”
From January 1, 2024 platforms will be required to collect data on how much you make, which they must then report to HMRC. It means Vinted, Depop, Etsy sellers are being warned ahead of the New Year, as the run-up to Christmas continues throughout December.
Constantin warned: “Platforms face hefty fines and penalties for failing to submit reports or submitting ‘inaccurate, incomplete, unverified sellers’ records. This gives them a huge incentive to make sure they meet their reporting obligations.” She went on: “If you have a profit-seeking motive, for example, buying premium items from outlets to sell at a profit online, your little side hustle might be seen as trading.”
“You may need still to file a self-assessment tax return with HMRC and pay income tax and National Insurance contributions paid accordingly,” she warned. Constantin said the changes “could bring a whole new raft of unaware individuals within HMRC’s reach and could make some taxpayers think twice about their wardrobe spring clean”.
As a general rule, you make sales of £1,000 or more in a year, you will need to consider whether a tax return is required, experts have warned ahead of January 1, 2024.