Badges of trade tax rules

by Michael Blaken

Published on 8th January 2024

There has been much information, and indeed misinformation, in the news recently about tax rules governing ‘side hustles’, such as selling goods on eBay or Vinted, or renting rooms via Airbnb.

This has been sparked by an update to the Organisation for Economic Co-operation and Development (OECD) guidance, which has resulted in more platforms like those mentioned sharing users’ transaction information with HMRC.

HMRC was already able to request the information from UK-based online operators, but has now joined international rules through the OECD, as part of a worldwide effort to clamp down on tax dodgers.

The rules apply to the sale of goods as well as services, such as food delivery, short-term accommodation lets, taxi hire and even renting out driveways for parking.

However, although the ability to share information has changed, the fundamental rules of declaring income haven’t changed – this comes under ‘badges of trade’. There needs to be an actual intent to make a profit and if you are just selling a few items, like unwanted clothing, this isn’t trading and isn’t therefore taxable.

What is interesting, however, is that this move is another step towards HMRC profiling taxpayers; it gives them just a bit more information. Big brother or, in this case, the tax office is watching!

For expert tax advice, contact our tax team. We help business owners across Swindon, Wiltshire, Cheltenham and Gloucestershire, and the wider area.

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