TAXING TIMES
Thousands of Vinted users issued warning ahead of October tax deadline – what you can do now
Plus watch our video on the top tips to sell on Vinted above
THOUSANDS of Vinted users have been issued a warning on tax rules ahead of an important deadline in days.
Those who make money selling items online may need to report their earnings to HMRC if they make a profit.
1
Firms like Vinted now have to pass on customer data to HMRC if a user sells 30 or more items a year, or earns over £1,700.
The new rules were brought in from the start of this year. Before that, some people making extra income still had to report their profits to HMRC.
But now Vinted and other selling platforms and marketplaces like Depop and eBay share data directly with the taxman.
It is part of a wider tax crackdown to help ensure that those who boost their income via side hustles pay up what they owe.
read more in money
It is worth noting that this isn't a new tax.
Anyone online might have to pay tax if they make £1,000 or more a year from selling items online and has done before now - but the new rules give the taxman greater visibility over what you earn.
Now Vinted is messaging users directly to remind them about the end of year tax rules.
Master Vinted Selling: Top 4 Expert Strategies
The shopping app has said it will message sellers to let them know if they need to file an HMRC seller form.
Most read in Money
Not every customer will contacted, only those who have made over 30 sales or £1,700 over the year.
The HMRC seller form doesn't necessarily mean that you owe tax.
The taxman will use it to verify against its own records to make sure sellers and renters are correctly reporting their income on their tax returns.
It comes ahead of a major deadline in the tax year on October 5.
This is when you need to register to file a Self Assessment tax return if you haven't done so before.
The deadline to submit the return for the 2023/24 tax year - and pay any tax you owe - is January 31, 2025 online.
When does the tax year start and end?
Tax years run differently to the standard January to December year
Instead, it runs mid-year from April to April.
Many other countries around the world have tax years that run with the calendar year.
In Ireland, the US, France and Germany for example, it starts on January 1 and ends on December 31.
But in the UK for historical reasons, our tax year starts and finishes mid-way through.
The 2023-2024 tax year starts on April 6, 2023, and ends on April 5, 2024.
The 2024-2025 tax year runs from April 6, 2024, to April 5, 2025.
But there's an earlier deadline of October 31 this year if you file via post.
It is worth bearing in mind that HMRC will fine you £100 for failing to file your return by the deadline.
Then, a £10 daily fine applies every day you don't submit your tax return.
Do I have to pay tax on my second-hand sales?
If you have made 30 sales or £1,700 this year you will be contacted by Vinted and asked to submit the seller report form on the app.
This year, the company said it will only approach new sellers who registered in 2024.
If you do not hear from Vinted then you don’t need to do anything, though you may need to file a tax return for other reasons separately.
Users who meet the criteria will be asked to add their National Insurance Number to a pre-filled form and check the details are correct before submitting it.
This will be done on the Vinted app.
You don't need to calculate or count anything yourself.
A Vinted spokesperson said: "Reporting members’ details to the authorities does not necessarily lead to taxation.
"Taxation is a separate matter that doesn't depend on HMRC reporting."
They added: "HMRC requires Vinted to collect information from members who meet the criteria mentioned above, regardless of whether or not their earnings are taxable."
Vinted said that it will be getting in contact with users who need to fill out these forms towards the end of the year.
What that means in practice is that money you make may be reported to the taxman if it's over the amounts above.
Whether or not you have to pay tax will depend on your wider circumstances.
The majority of people pay income tax automatically through employment via what's known as PAYE.
Do I need to pay tax on my side hustle income?
MANY people feeling strapped for cash are boosting their bank balance with a side hustle.
The good news is, there are plenty of simple ways to earn some additional income - but you need to know the rules.
When you're employed the company you work for takes the tax from your earnings and pays HMRC so you don't have to.
But anyone earning extra cash, for example from selling things online or dog walking, may have to do it themselves.
Stephen Moor, head of employment at law firm Ashfords, said: "Caution should be taken if you're earning an additional income, as this is likely to be taxable.
"The side hustle could be treated as taxable trading income, which can include providing services or selling products."
You can make a gross income of up to £1,000 a year tax-free via the trading allowance, but over this and you’ll usually need to pay tax.
Stephen added: "You need to register for a self-assessment at HMRC to ensure you are paying the correct amount of tax.
"The applicable tax bands and the amount of tax you need to pay will depend on your income."
If you fail to file a tax return you could end up with a surprise bill from HMRC later on asking you to pay the tax you owe - plus extra fees on top.
But in some cases, you need to report income to HMRC yourself, via a self assessment tax return, and then pay a tax bill.
Miruna Constantin, tax manager at accountancy group RSM, previously warned sellers: "It’s never been easier to sell on that ugly festive jumper or garish socks with online platforms like Vinted.
"However, it’s important to understand the tax rules or they could get a costly shock from HMRC in the future."
She added: "If you have a profit-seeking motive, for example, buying premium items from outlets to sell at a profit online, your little side hustle might be seen as trading."
It can be complicated for those who may not be aware of the ins and outs of the tax process, or who only sell items online occasionally.
A simple rule of thumb is if you make £1,000 or more in a year in sales, you'll need to consider whether a tax return is required.
It's also worth noting that it's generally profit that counts when it comes to tax.
For instance if you sell an item for less than you bought it, there won't be tax to pay, Vinted say.
Even if you do make a profit, there are certain allowances that mean you can earn a certain amount before you pay tax.
Everyone gets a personal annual tax-free allowance of £12,570 a year, though this can be higher or lower for some people.
You'll usually get this deducted via your pay if you're employed - you'll see the code 1257 on you payslip which means HMRC factors in this allowance when deducting tax.
Everyone gets a £1,000 annual tax-free allowance on income made from trading and property.
Anything over this amount and you'll usually have to report it to HMRC via a self assessment tax return.
There's also the capital gains tax allowance of £3,000 which can be used when selling an asset that's increased in value.
Guidance from HMRC published as the start of the year can help you understand if you are trading or making a capital gain -
Miruna said: "The good news is, the information collected by platforms must be shared with HMRC as well as with sellers, which should help taxpayers get their affairs right.
"However, it can come as a surprise to many individuals, leading them to prepare tax returns for the first time and make some think twice about that wardrobe spring clean."
When do I need to file a tax return?
Self Assessment is a system HMRC uses to collect income tax.
Tax is usually deducted automatically from wages, pensions and savings, but people and businesses with other incomes must report it in a tax return.
It is not just online sellers who are required to fill out a tex return.
The rule applies to the following:
- Your income from self-employment was more than £1,000
- Earned more than £2,500 from renting out property
- You or your partner received high-income child benefits and either of you had an annual income of more than £60,000
- Received more than £2,500 in other untaxed income, for example from tips or commission
- Are limited company directors
- Are shareholders
- Are employees claiming expenses over £2,500
- Have an annual income over £100,000
Some Vinted users will have to submit a Self Assessment tax return if they earn over £1,000 in profit.
The process is separate from the HMRC reporting requirement, and Vinted users are responsible for handling this themselves.
If you are confused about whether or not you need to file a Self Assessment tax return you can use an online tool on GOV.UK.
How much can I be fined for filing my taxes late?
You can be fined if you do not file a tax return on time.
Late filing fees are pretty steep, so make sure you get your self-assessment return in before January 31.
According to HMRC, you'll get a £100 fine for failing to file your return a day after the deadline.
Then, a £10 daily fine applies every day you don't submit your tax return.
This is capped at 90 days - or £900.
So, on top of the initial £100 fee, a £1,000 maximum late filing fine applies.
If you're six months late, there's a further £300 fine or 5% of the money you owe - whichever is higher.
That's on top of the daily £10 charges built up so far, so there's no shortcut to a smaller payment once you're late.
And after 12 months, another £300 or 5% fine applies.
Interest is also added on top of this.
If you deliberately haven't filed your tax return, a fine of up to 100% of the tax due could also be sent.
The tool lets you submit information about your earnings and then will tell if you need to file one or not.
You must register to make a Self Assessment tax return by October 5.
You can register online via the GOV.UK website.
To register online you must log on to your business tax account on the HMRC website and select ‘Add a tax to your account to get online access to a tax, duty or scheme’.
If you do not already have sign in details, you’ll be able to create them when you sign in for the first time.
If you do not want to register online you must send a form to the following address: Self Assessment, HM Revenue and Customs,
BX9 1AN, United Kingdom.
After you submit your form you will then get a unique taxpayer reference code (UTR) and activation code from the HMRC.
It’s a 10-digit number and it might just be called a tax reference.
This tends to arrive in the post 15 days after you register for a tax return.
Upon receiving the UTR you can then file a Self Assessment tax return online via the GOV.UK website or by post.
If you file by post the deadline is October 31 2024.
READ MORE SUN STORIES
However, if you file online you have up to January 31, 2025.
Check out our step-by-step guide on filling out a tax return here.
Topics