Leading audit, tax and business advisory firm Blick Rothenberg has warned that eBay sellers and other online traders could face substantial tax demands if they fail to register for self-assessment by year-end.
Under the new reporting rules, platforms such as eBay must provide HMRC with details of sellers who use their services in 2024—reports that must be submitted by 31 January 2025.
Fiona Fernie, a Partner at Blick Rothenberg, said: “Now that winter is here, we are well over halfway through the first year of the online sales platform reporting regulations. HMRC will compare reported seller income with self-assessment records, so anyone not declaring income could face significant penalties of between 20% and 70% of the tax owed—plus interest.”
The deadline for registering for self-assessment for trading income in the 2023/24 tax year was officially 5 October 2024. However, Fernie says that sellers who have missed that date should still come forward: “It’s unlikely there will be adverse repercussions if they file their tax returns by 31 January 2025.” Failure to notify HMRC of a tax liability makes it “extremely easy” for HMRC to identify discrepancies, especially given the new reporting regime.
Small-scale sellers receiving gross trading receipts below £1,000 in a tax year benefit from a trading allowance, though they must still include their income on their tax return. Those earning more than £1,000 should seek professional advice to determine whether they are operating a trade or liable for capital gains instead.