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Reporting rules for digital platforms

In July 2020 the OECD (Organisation for Economic Cooperation and Development) published “Model Rules for Reporting by Platform Operators with respect to Sellers in the Sharing and Gig Economy (MRDP)”. During the discussions for this policy, the UK was heavily involved and agreed to implement it. This regulation will come into force from 1 January 2024, and the first self-assessment to be filled will be due by 31 January 2025 One of the main objectives of this policy is to help prevent tax evasion by focusing on people who don’t declare to HMRC that they earn income from online marketplaces, such as Etsy, eBay, Amazon and other digital platforms. Currently, HMRC can access information from UK-based online marketplace platforms, but implementing the OECD rules will enable HMRC to gain information from platforms based outside of the UK. This will happen by HMRC exchanging information with other tax authorities, who will gain the marketplace platform data based in their country. The OECD will also affect UK-based digital platforms, as they will be required to collect information about their sellers, which they may not already have. The platforms will need to collect and verify sellers' information to report it to HMRC so that HMRC can identify where the seller resides and their jurisdiction. Digital platforms sharing their information with HMRC will mean that a person’s data will be given to HMRC and other tax authorities. This can include data, such as addresses, bank account information and income earned. Currently, a tax-free trading allowance of £1,000 per year is in place, meaning if you make over £1000 a year on online marketplaces then you will need to look at if it is taxable and if a self-assessment is required. If you need to report any additional income, you will need to register before 5 October to pay your tax through a self-assessment. If you are not sure whether you need to file a self-assessment, the government website has a service to check. https://www.gov.uk/check-additional-income-tax At the beginning of 2023, HMRC started sending out letters to people who they believe earn money from online marketplaces, and haven’t declared their income. These include websites such as Etsy, eBay and Amazon. Those who received letters would have also received a certificate of tax position which should have been completed and returned to HMRC.

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