HMRC’s New Marketplace Requirements
As you may know, in 2024 HMRC introduced new rules requiring all online marketplaces – from small platforms like ours to global giants like Airbnb and eBay – to collect information about sellers and their earnings. This helps HMRC match up details with individual tax returns and keep everything in order.
To comply with these new requirements, we’re asking our makers to provide a little extra information for our records. We understand this might sound a bit daunting, so we want to explain what’s happening, why these changes are being introduced, and how they affect you.
What Are DAC7 and the OECD’s Reporting Rules?
Governments worldwide are working together to make tax systems fairer and more transparent. Two key initiatives that play a part in this are:
- DAC7: This is a European Union rule that requires digital platforms to report information about sellers using their services.
- OECD’s Model Rules: These are global guidelines that ensure platforms like ours provide tax authorities with details of income earned by sellers. The UK has adopted these rules, so from January 1, 2024, platforms must collect and report sales data to HMRC.
Why Are These Rules Important?
These new measures aim to:
- Promote fairness: By reporting income earned through digital platforms, everyone contributes their fair share of taxes, just like physical businesses.
- Simplify compliance: Instead of individual sellers having to navigate more complex tax rules, platforms like ours will handle reporting for you.
What Does This Mean for You?
The thresholds for UK platforms starting January 2024 require reporting for sellers who either exceed 29 transactions or earn over €2,000 (or the equivalent in GBP) in a calendar year. As of 2025, all online marketplaces have a legal obligation to ask all their sellers for some specific basic information, this is different to last year where we were only required to collect the information from those who had met the threshold.
For all Folksy sellers we will need to collect basic information from you, such as:
- Your name and contact details.
- Your tax residency.
- Your Tax Information Number (NI Number, Company Number and/or VAT Number).
- Details of your sales made through Folksy.
Does your shop meet the threshold for Folksy to submit your earnings to HMRC?
We have interpreted transactions as items sold, not orders made to err on the side of caution as HMRC do not define what a transaction is. For those impacted by the thresholds, we are legally obliged to report this information to HMRC. We will be in touch if your shop is one of those affected by the thresholds.
Don’t worry – we’ll handle this process securely and transparently. You’ll also receive a summary of the information we report, so you can keep it for your own records
How Will This Help You?
While reporting might sound like an extra step, it actually makes things easier for you. By complying with these rules, you can:
- Ensure your business stays compliant and avoids any tax-related surprises.
- Enjoy peace of mind, knowing that Folksy is handling these regulatory requirements responsibly.
How we process HMRC records
We want you to feel confident about what data we’re collecting, why we need it, and how we’ll handle it. We’re fully committed to keeping your data safe and secure. Any information you provide for HMRC reporting will be treated with the greatest care. We’ve explained the process below to give you peace of mind.
Who needs to provide this data?
We, and all online marketplaces, are legally required to collect this data for all our sellers, however only those who meet the specified threshold will be declared to HMRC. If, in the last year, a seller has 30 or more sales or the value of sales totals €2,000 (or the equivalent in GBP) or above. We will prompt you on your Folksy dashboard and by email to fill in a seller’s declaration to HMRC.
Please note it will make no change to whether you have to complete a self assessment or not. If you are under the personal trading allowance threshold then you still won’t need to fill one in even if we do have to report the details. For example, if you create cards you may have made more than 30 sales but still be under the allowance. Equally if you are over the personal trading allowance you will still have to complete your self assessment – this doesn’t remove that responsibility.
How do I provide this data?
We are providing a secure form on Folksy’s website where you can enter the information. The data is collected and transmitted securely to our servers over an encrypted connection.
How is this data stored on Folksy?
Your data is encrypted with a very strong encryption algorithm as soon as it is submitted, so it is not human-readable to any of our staff or systems. Once we receive your encrypted data, we remove it from all of our servers to store in a secure, off-site location that is not connected to the internet. None of your data is kept anywhere on our live systems.
How long do you keep the data for?
We are legally required to keep a copy of your data for five years. It will remain strongly encrypted, stored on inactive drives in a safe location during this time.
How is this data processed and sent to HMRC?
When it is time for your data to be sent to HMRC, the encrypted files will be decrypted in a temporary folder by our technical lead. The data will be collated into a HMRC’s required format and sent onto them in the manner they specify. The technical lead will then securely delete the temporary folder the files were processed in so that none of your data exists on our live systems.
Our Commitment to You
We’re here to support you every step of the way. We’ll provide clear guidance on what’s required, make the process as smooth as possible, and ensure your data is handled with the utmost care. These new rules might take some getting used to, but together we can make it straightforward and stress-free.
Thank you for being part of our creative community and for helping us meet these new requirements. If you have any questions about HMRC’s requirements, or on how your data will be processed by Folksy please reach out to support@folksy.co.uk and we’ll be happy to chat this through with you.
