Glossary · UK
What is Digital Platform Reporting (DAC7)?
A requirement from January 2024 for digital platforms to report UK sellers' income annually to HMRC, enabling the tax authority to cross-check whether sellers are correctly declaring income from online sales and services.
Full Definition
Digital Platform Reporting -- implementing the OECD's Model Rules for Reporting by Platform Operators and the EU's DAC7 directive in UK law -- came into force for platforms operating in the UK from 1 January 2024, with first reports due to HMRC by 31 January 2025. The rules require digital platforms to collect, verify, and annually report information about sellers who use their platforms to earn income, including the seller's name, address, tax identification number, and the amounts earned during the calendar year. Platforms in scope include those that facilitate the sale of goods (such as eBay, Vinted, Etsy, and Facebook Marketplace), rental of property (Airbnb, Vrbo), provision of personal services (Fiverr, Upwork, TaskRabbit), and provision of transport (Uber, Bolt, Deliveroo). The reporting threshold is low: platforms must report sellers with 30 or more transactions or earning more than approximately 2,000 euros (an indicative threshold) in a year, though most platforms collect data on all UK-connected sellers. HMRC uses the data from these reports to cross-reference against Self Assessment tax returns. Sellers whose income from platforms is not declared, or is declared incorrectly, are at increased risk of an HMRC enquiry. The key reliefs that remain available to online sellers are the trading allowance of £1,000 per year (meaning gross income below this threshold is tax-free and does not need to be declared) and the property income allowance of £1,000 for rental income. Sellers earning above the trading allowance must register for Self Assessment and report the income. It is important to note that DAC7 reporting does not create a new tax liability -- it is a disclosure mechanism. Selling personal possessions at a loss or for amounts below their original purchase price does not give rise to a gain, and casual sellers of second-hand goods are unlikely to be trading. However, those making a living from buying and reselling goods online are likely to be trading for tax purposes and should already be declaring income.