The HMRC tax crackdown on users of “side-hustle” marketplace apps will not affect most people selling their pre-loved items, a tax adviser has clarified.
Chris Smith, Director at BKL Chartered Accountants & Tax Advisers, explained that the new measures will target those who are running an unregistered business for profit on the apps, not individuals selling a few old items.
Under the changes, apps such as Vinted, Depop, and Ebay will be required to supply HMRC with the bank account details and the number of transactions made by users who have earned over £1000.
Smith said: “There is a distinction between people selling the odd clothing or bit of craft they no longer want and actually running a business by buying from charity shops or car boot sales to resell for a profit.
“Effectively, HMRC are saying, ‘We are okay with a small side hustle where income is up to £1,000; if it is over £1,000 then you may need to pay tax.’”
Smith stated that the new measures simply reflect HMRC keeping up with trends in the digital space to ensure they have the powers to be able to track down individuals who do not report their taxable income.
Misinformation about the new measures has swirled on social media, causing concern for many who fear they may be taxed for their earnings.
It’s crazy how misinformation spreads so quickly on this app bro 💀 the tax man is not coming after you for clearing out your clothes on vinted
— anna ⋆⁺₊⋆ ☾ (@teethlikearms) January 2, 2024
Many other social media users have expressed a belief that the measures focus unnecessarily on individuals’ taxes, rather than large businesses.
Maisie, 22, from Barking said: “I think it’s right that people running businesses on Vinted and the like are being taxed, but I can see why people think it’s a bit hypocritical for HMRC to be focusing on small businesses while big corporations evade taxes.”
The government are going to crack down on people innocently selling clothes etc on @eBay & @vinted for pence.
— Dan White : Disability Campaigner & Author ♿️ (@Danwhite1972) January 2, 2024
The government said it would "bear down on tax evasion"
Meanwhile, it is estimated the 2,000 largest businesses in the UK may owe £34.8bn in tax.
Priorities.
Furthermore, she expressed concern that the misinformation surrounding the new measures will intimidate users from selling their clothes and practising sustainability.
She said: “I do worry that with all the stuff being spread about this – that HMRC will tax all income, not just big sellers- that some people will be put off selling their stuff and it will go to waste instead.”
