People selling unwanted items – through websites such as Vinted, Etsy or eBay - could soon face scrutiny from the taxman under new rules addressing the amount of cash being made online.

From this week selling sites, alongside other digital platforms offering goods or services such as Airbnb, must start collecting information on how much their users are making.

Offloading unwanted items via the internet has become increasingly popular in recent years – particularly in the cost of living crisis - with secondhand selling site Vinted estimated to have more than eight million UK members alone.

Regardless of whether the money being made is a full-time job or ‘side-hustle’, companies are now being required by law to keep a track of – and eventually share with HMRC officials - how much account holders are getting paid.

Who is affected?

While HMRC has always been able to request such information from UK-based online operators on a more ad-hoc basis, the new rules will mean sharing will now happen automatically. It also forms part of a wider global effort – under the Organisation for Economic Cooperation and Development (OECD) – to tackle those not paying the right amount of income tax.

The new regulations, which came into force this week, should enable HMRC to more easily identify where people aren’t paying the correct or necessary amount of tax on their total earnings.

Digital platforms in the UK that make it possible to sell goods, or offer services by UK or other taxpayers, will be affected as will UK taxpayers – either individuals or companies – who are providing services or selling items.

This will include those offering transport such as taxi or private hire, food delivery services, freelance work or the letting of short-term accommodation such as a spare room or occasional holiday let. Those who sell considerable amounts of secondhand clothes may too find that they’ll have to share more information with the tax man.

What information will be collected?

Companies stared collecting the relevant information from January 1. However the reporting aspect of sharing the information will not happen for the first time until January 2025.

Among the details digital platforms are likely to request are a user’s name, address, date of birth and national insurance number. If the income relates to a property letting – such as holiday accommodation – that home’s exact address will be noted too.

Alongside very detailed information about how much money any account has been paid over the course of 12 months in transactions will also be information about any sellers’ fees or insurance the account’s owner has paid in return.

All of this information, says HMRC, will enable staff to link the data and information it gets from the digital platforms, with the tax returns submitted by UK residents, to ensure those earning money from additional income streams are contributing the correct amount of tax.

The new rules explain: “The regulations will support the government’s work to help taxpayers get their tax right first time, and to bear down on tax evasion.

“While HMRC already has the power to access information from UK-based platforms on the income of sellers on the platform, implementing the OECD rules will enable HMRC to exchange information with other tax authorities to access data from platforms based outside the UK quickly and efficiently.

“This will improve international cooperation and mean that tax authorities have similar visibility of income for sellers on digital platforms as they would have with traditional businesses.”

Will I have to pay tax?

Paying tax on any additional money you earn online will depend on whether you are considered a ‘trader’.

Being a trader suggests you regularly sell goods or services online to make a profit. For example people who may purchase secondhand clothing from boot sales or charity shops – and then sell online for more – may find they’ll now need to declare their side-hustle.

Under the latest rules, businesses are not expected to be required to share data about sellers who make fewer than 30 transactions or the equivalent to €2,000 (£1,740) each year – however anything over this and you may find your account information is now automatically sent to HMRC for scrutiny.

The government website offers an ‘additional income checker’ to help people decide whether they need to declare extra earnings and you can find that here.

When it comes to paying tax, anyone who earns £1,000 or less from a side gig in the course of a tax year does not have to pay tax on those earnings or declare them, under what is known as a Trading Allowance.

That said you should keep any documents relating to that money in the event that HMRC asks you for further evidence.

If you take more than £1,000 from your extra work – such as by renting our your driveaway or selling items online – you can still benefit from the £1,000 trading allowance but you may now need to now fill out a self assessment tax return to declare those earnings, should you do already do so, in the event that it demands some extra tax.