Are you selling on eBay, Etsy, or other online digital platforms? – Find out whether the new OECD model reporting rules (MRDP) affect you

The new year saw the introduction of new reporting rules for digital platforms. From 1 January 2024, digital platforms are required to report annually to HMRC on sellers operating through their platforms. The digital economy has grown significantly in recent years and activities performed through this economy may not always be visible to tax authorities.

The new rules are part of a global initiative under the OECD Model Reporting Rules for Digital Platforms  which aim to reduce the tax-loss to tax authorities, including HMRC, through such digital platforms. Whilst HMRC can already access information from UK-based platforms, implementing the OECD rules will enable HMRC to send and receive information from overseas tax authorities as well.

What are OECD Model reporting rules for digital platforms? – Is this a new tax?

No, this is not a new tax. The new rules introduced from 1 January 2024 are simply new reporting requirements to HMRC which digital platforms must comply with.

What is a digital platform?

Digital platforms include apps and websites which facilitate the provision of goods and services between sellers and clients such as food delivery services, taxi and private hire services, freelance work and the letting of short-term accommodation. Examples of digital platforms include but are not limited to Airbnb, Etsy, eBay, Vinted.

What information will HMRC receive?

The first reporting period is for the 2024 calendar year, and reports must be submitted to HMRC by 31 January 2025. HMRC is increasing reporting obligations of digital platforms. Information which must be reported to HMRC by digital platform operators will include details of all registered sellers such as full name, address, taxpayer identification number, date of birth or business registration number, details of earnings, and bank account details. Reporting platform operators will be required to keep these records for a period of five years beginning with the day after the end of the reportable period to which they relate.

When will digital platforms be required to report income to the tax authorities? – Do they have to report on all sellers?

There are a few exceptions for ‘excluded sellers’ where digital platforms will not be required to report on sellers, for example those sellers for which the platform operator solely facilitated less than 30 relevant activities for the sale of goods and for which the total amount of consideration paid or credited did not exceed 2,000 Euros during the reportable period.

Do I need to do anything?

No, as the digital platform is responsible for complying with reporting requirements to HMRC. However, responsibility for calculating and paying any tax on activities a taxpayer carries on through digital platforms will remain with the taxpayer.

Do I need to pay tax on earnings I make through a digital platform?

It depends. If you are operating a trade, tax will be payable if the trade generates a profit. Taxpayers can earn up to £1,000 a year of gross trading income as well as up to £1,000 a year of gross property income before any tax becomes payable. If gross income exceeds £1,000, you should report these earnings to HMRC.

For individuals having a clear-out and selling second-hand items such as clothes which are no longer wanted, it is unlikely that such activities will land you with a tax bill however to ensure you do not fall foul of HMRC’s rules, you should seek advice from your tax adviser.

Get in touch

For further information on the new OECD Model Reporting Rules and suppliers obligations feel free to contact our tax experts.