Some of you may have noticed from social media and the internet there are some changes which will come into force with respect of E-commerce businesses. Since I am the E-commerce specialist, I would like to provide some information as to what changes have been implemented from 1 January 2024.
HMRC announced that digital platforms such as Vinted, Ebay and Amazon to name a few, will be required to report seller’s information and income to HMRC.
How will this work?
The seller’s income information is collected by the digital platforms and this will be reported to HMRC from January 2025.
Copies of these reports will be shared with the sellers which will help them comply with their tax obligations. The regulations will help sellers get their tax right first time and will help to reduce the risks of tax evasion.
HMRC consider the resale of goods, or production of goods for sale with the intention of making a profit, as trading and therefore the seller will have to pay tax on any profits which may arise. There are various scenarios which are not considered a trade and therefore you will not be required to report this to HMRC.
HMRC do not class the sale of personal belongs (e.g clearing items from your attic) as trading if they were purchased with no intention of resale. However, if you decide to purchase items (e.g antiques) with the intention to resell then this would be considered trading.
What am I allowed to earn?
If your total trading income (not profit) is less than £1000 for the tax year, you are not required to register for self employment or report your earnings to HMRC.
You can check if you need to tell HMRC about additional income at https://www.gov.uk/check-additional-income-tax
If you are trading and are required to report your earnings to HMRC, you may need to consider a VAT registration should your turnover exceed the current VAT threshold of £85,000. To see if you are required to register for VAT please visit the HMRC website at https://www.gov.uk/register-for-vat
You may also need to consider customs requirements if you are moving goods within the EU, Northern Ireland and outside the EU. The systems are complex and professional advice should be sought before you start trading to ensure you comply with the necessary protocols of each country. Should you require further assistance or have any questions please contact myself, Michelle Downs at our West Malling branch.