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Let’s be honest: the headlines earlier this year about the "Side Hustle Tax" caused a fair amount of panic. If you’re selling on Amazon FBA, running a TikTok Shop, or monetising an audience as an influencer, you likely saw reports claiming HMRC is coming for every penny you make online.
The reality is slightly more nuanced, but the core message is true: HMRC is closing the net on unreported digital income.
As a specialist social commerce accountant in the UK, I spend my days looking at settlement reports and payout dashboards. I can tell you that while the tax laws haven't actually changed (you always had to pay tax on trading income), HMRC’s ability to see that income has changed drastically.
Here is what is happening with the new reporting rules and, crucially, how it affects your tax position for the deadlines approaching in 2026.
The rules in question are known officially as the Model Rules for Reporting by Platform Operators (often referred to as DAC7 in Europe).
In plain English? It means digital platforms are now legally required to track their users' earnings and send a spreadsheet of that data directly to HMRC.
Before this, HMRC had to open a specific enquiry to request data from Amazon or other marketplaces. Now, the data flow is automatic. The platforms collect your name, address, National Insurance number, and total sales, and they hand it over annually.
HMRC is targeting "digital platform operators." If you use software or a website to sell goods or services, they are likely on the list.
Based on what we see across our client base, the major players sharing data include:
If you are an Amazon FBA accountant UK specialist or a seller, you know that Amazon is rigorous with compliance. They have been collecting your tax details for years; now they are actively transmitting that data to the tax authorities.
Not everyone gets reported. There are thresholds in place to filter out people just clearing out their wardrobes casually.
The platforms must report you if, in a single calendar year, you meet either of these criteria:
Be careful here. The threshold is based on gross sales, not profit.
If you sell £5,000 worth of stock on TikTok Shop but spend £4,500 on ads and product costs, your profit is only £500. However, TikTok reports the £5,000 figure to HMRC. If you don’t file a return because you think "I hardly made any profit," HMRC sees £5,000 of undeclared income and assumes the worst.
This is why accurate TikTok Shop tax UK accounting is non-negotiable. You must prove the expenses to lower the tax bill.
Here is a specific pain point we see constantly at Social Commerce Accountants, particularly for influencers and affiliate marketers.
If you are an Amazon FBA seller, we have tools like A2X or Link2MyBooks to pull data into Xero. It’s seamless.
However, the integration software for creators and affiliates doesn't really exist yet.
If you earn money through:
There is no "magic button" to push this data into Xero. It is often a manual process of downloading CSVs, taking screenshots of dashboards, and reconciling payouts that land in your bank account net of fees.
As an accountant for TikTok influencers, I see many creators getting this wrong. They wait for the cash to hit the bank and declare that. But HMRC wants to know the gross amount before the platform took their cut. With the new data sharing, if TikTok reports the gross and you report the net, you have a discrepancy.
If HMRC receives data from Amazon or Vinted that contradicts your tax return (or lack of one), they won't kick down your door immediately. They will start with a "Nudge Letter."
This is a polite but firm letter stating: "We have information that suggests you have earned money from online platforms..."
If you ignore this, you move into penalty territory.
If you realise you have missed declaring income in previous years, do not wait for them to find you. You may need to use the HMRC disclosure facility for online sellers. This is a way to put your hand up, admit the mistake, and usually secure lower penalties than if HMRC catches you first.
The data sharing is already live. The reports for the 2024 calendar year are being processed by HMRC right now, which means your Self Assessment filed in January 2026 (for the 24/25 tax year) is the danger zone.
Here is your checklist to stay safe:
If you are turning over more than £85k (VAT threshold) or even just hitting £30k-£40k, spreadsheets are a liability. You need cloud accounting (Xero) that matches the sophistication of the platforms you sell on.
Amazon FBA tax UK rules are complex. Amazon settles every two weeks, deducting fees, ads, and shipping before sending you the cash. You must account for the gross sales and claim the fees as expenses. If you just bank the payout, you are under-reporting turnover, which affects your VAT threshold calculations.
There is always an HMRC tax refund deadline warning floating around, but for sellers, the payment deadline (31st January) is the one that matters. Ensure you have set aside roughly 25-30% of your profit for tax and National Insurance.
Generalist high-street accountants often don't understand that a "payout" isn't "revenue." They might not know how to handle a TikTok Shop settlement that spans two different months. You need an ecommerce tax return service that speaks the language of ASINs, SKUs, and GMV.
The days of flying under the radar with online sales are over. By 2026, HMRC’s data matching will be sophisticated and ruthless.
If you are trading legitimately, you have nothing to fear—provided your numbers are accurate. If you are an influencer struggling to reconcile your affiliate income, or an FBA brand scaling past seven figures, we can help you sleep easier.
Do you need to get your historic reporting up to date before HMRC sends a letter?
Book a discovery call with Social Commerce Accountants today.
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