Nearly four million online sellers have been flagged to HMRC following a major rule change, as the tax authority ramps up efforts to crack down on people who may not be paying enough tax.
New figures show HMRC collected data on 3.99 million sellers last year, up sharply from just 1.5 million the year before, after new reporting rules for online platforms came into force. The change, introduced in 2024, requires sites such as eBay, Vinted and Etsy to share details of users who make more than £1,700 a year or complete more than 30 sales annually.
The scale of activity being tracked has surged, with the total value of reported sales more than doubling from £25.5 billion to £54.8 billion in a single year.
Despite the increase, HMRC has admitted it cannot yet issue fines using the data because current systems require the information to be processed manually.
However, officials say new systems are in the “final stages of development” and will soon allow the department to analyse the data more effectively and begin compliance action.
Tax experts say the development could mark a turning point. Dawn Register, a tax dispute resolution partner at accountancy firm BDO, described the new dataset as an “absolute game-changer for HMRC and a goldmine for tax inspectors seeking to ensure that online sellers pay the right amount of tax”.
Under current rules, people must pay tax if they earn more than £1,000 in a tax year from trading activities, such as buying or making items to sell for a profit.
However, HMRC has stressed that casual sellers are not affected, and those selling unwanted personal items for less than they originally paid do not owe tax.
An HMRC spokesman said: “Absolutely nothing has changed – people selling unwanted items online from time to time are not liable to pay tax on that activity. As has always been the case, some people trading via websites or selling services online may need to register for Self Assessment.”
The focus instead is on individuals effectively running small businesses through online marketplaces who may not be declaring their income properly. Anyone who does owe tax is required to inform HMRC, usually by registering for Self Assessment and submitting a tax return.
With millions of sellers now on HMRC’s radar and new systems nearing completion, experts warn enforcement is likely to tighten in the near future, leaving those who have not declared their earnings increasingly exposed.