Countless users of online marketplaces like eBay or Vinted who earn supplementary income will be greeting a new, streamlined process for declaring their profits.
At present, earning over £1,000 extra within a tax year necessitates the completion of a self-assessment tax form. However, reports suggest that this limit is set to increase to £3,000.
Those earning less than £3,000 will have access to an easy-to-use online declaration form, expected to roll out by 2029.
The forthcoming alteration means roughly 300,000 individuals will be exempt from the more complex self-assessment process. However, the amount of tax owed remains unchanged—it’s merely the reporting method to HM Revenue & Customs (HMRC) that’s getting a makeover, reports the Mirror.
Selling personal items at home likely won’t incur tax obligations, as per HMRC’s guidance, unless you’re tipping into trading territory—meaning you intend to turn a profit and your earnings exceed £1,000 within a tax year.
James Murray, Tax Minister, highlighted the importance of adapting to the times when speaking with The Sun: “From selling old games to creating content on social media, we are changing the way HMRC works to make it easier for Brits to make the very most of their entrepreneurial spirit.”
The government is set to simplify the tax system, with a move that’s bound to be welcomed by many. The new initiative aims to reduce the administrative burden on individuals, particularly those with side projects.
“Taking hundreds of thousands of people out of filing tax returns means less time filling out forms and more time for them to grow their side hustle. We are going further and faster to overhaul the way HMRC works to make sure it delivers the Plan for Change that will help put more money in people’s pockets.”
In a significant shift, online marketplaces like eBay and Vinted are now required to share transaction data directly with HMRC. This marks a change from the previous system where HMRC had to request such information.
If you’ve sold at least thirty items or made around £1,700 (about €2,000) or offered paid services through an online platform in 2024, expect to be notified that your sales figures and some personal details will be forwarded to HMRC.
However, this doesn’t automatically mean you’re liable for tax—it only applies if your activities qualify as trading. For clarity on your position, visit GOV.UK. Remember, there are various other scenarios that might necessitate completing a self-assessment form, such as:
- You earned more than £2,500 in untaxed income, for example from tips or commission
- Your taxable income was over £100,000
- You’re a trustee of a trust or registered pension scheme
- You’re a director of a company (unless it was a non-profit organisation)
- You need to pay Capital Gains Tax on profits from selling things like shares or a second home
- Your income from renting out property was more than £2,500
- You have income from abroad you need to pay tax on
- Your state pension was more than your personal allowance, and your only source of income
- Your income, or that of your partner, was over £60,000 and you’re claiming Child Benefit
- Your income from savings or investments was £10,000 or more before tax