HMRC digital platform reporting: what it means for you

From 1 January 2024, UK digital platforms — covering marketplaces, freelance sites, ride-share and delivery apps, and short-let accommodation sites — have been required to collect and report information about sellers to HMRC under international rules adopted across many countries, not just the UK.

The first reports covering the 2024 calendar year were sent to HMRC in January 2025, and reporting continues annually from there. This was a change in visibility for HMRC, not a change in what is taxable — the underlying tax rules on trading income are unchanged.

A small-seller exemption means platforms do not have to report individuals who make fewer than 30 sales and less than around £1,700 in the year. This protects genuinely casual, low-volume sellers from being reported at all, though it is a reporting threshold, not a tax exemption in itself.

The critical distinction is between selling personal possessions and trading. Selling your own used items, even regularly and even for a reasonable amount of money, is not a taxable activity, because there is no profit-making trade — you already owned the goods for personal use.

Trading, by contrast, means buying or making items with the intention of reselling for profit, or providing services for payment on an ongoing basis. This has always been taxable through Self Assessment once profits exceed the £1,000 trading allowance, and platform reporting does not change that threshold.

For freelance platforms such as Fiverr, Upwork and PeoplePerHour, income earned by providing services has always been trading income in the same way as any self-employment. HMRC online sellers and freelancers alike now have their totals independently confirmed rather than known only to them and the platform.

Short-let accommodation platforms report hosts in the same way as sales marketplaces. Property income above the £1,000 property allowance generally needs declaring, and where a host has furnished holiday letting status, additional specific rules can apply.

HMRC uses the data it receives for risk assessment and data matching, comparing platform-reported figures against what has actually been declared through Self Assessment. A mismatch does not automatically trigger an investigation, but it does increase the likelihood of an HMRC nudge letter or a more detailed enquiry.

A nudge letter is a prompt, not an accusation. It typically asks you to review your tax position for a specific period and either confirm everything is correctly declared or take action to correct it. Responding thoughtfully, ideally with professional advice, usually resolves things without escalation.

If you genuinely have nothing to declare — for example, you were selling personal possessions or you are below the trading allowance — a calm, factual response explaining your position is usually all that is needed.

If review shows you do have undeclared trading or platform income, HMRC’s Digital Disclosure Service allows you to come forward voluntarily. Doing so before you are contacted, or promptly after a nudge letter, generally results in significantly lower penalties than if HMRC identifies the position first.

Going forward, if your platform activity is genuinely a trade, registering for Self Assessment, keeping simple records of income and costs, and filing on time is the straightforward way to stay ahead of any future data-matching, rather than waiting to react to it.

Source: Income Tax rates and allowances (gov.uk) · Self Assessment (gov.uk)