HMRC has acquired expanded powers that mandate digital platforms to share details of individuals engaged in services or selling goods.
Here, we delve into the specifics of these new rules and explore the implications for both platform users and tax authorities.
Understanding digital platform reporting rules
- HMRC’s new powers cover various individuals, including small business owners, second-hand sellers, freelancers, delivery drivers, taxi drivers, and property owners.
- The information to be provided includes both personal and bank details.
Side hustle surge
- Research indicates a significant rise in side hustles, with one in five UK adults adopting them since March 2020.
- One in six individuals engaged in side hustles is earning over £1,000 monthly in addition to their primary income.
Strengthening HMRC’s enforcement powers
- The UK Government aligns with global initiatives and has implemented the OECD’s Model Reporting Rules for Digital Platforms.
- These rules empower HMRC to address non-compliance effectively.
Impact on digital platforms
- Apps and websites will be required to disclose income details of sellers to HMRC.
- The rules extend HMRC’s investigative reach to individuals earning through foreign-based platforms.
Timeline for implementation
- From January 1st, 2024, platforms are mandated to initiate data collection.
- The first reports are scheduled to be submitted to HMRC in January 2025.
Reporting additional income
- Taxpayers exceeding the £1,000 property/trading allowance for additional income may need to register for self-assessment.
- Those with side hustle income below £1,000 annually are exempt from reporting this income to HMRC.
As HMRC gains new powers, individuals and businesses must be aware of the changes and ensure compliance with the evolving regulations. Stay informed to navigate these shifts effectively and avoid potential pitfalls in the ever-changing tax landscape.