More People Are Selling Their Old Clothes Online. Governments Want Their Cut.

British tax collectors are the latest to seek a share of the boom in secondhand fashion, forcing online marketplaces to hand over more details of customer transactions.

Vinted, Depop and other marketplaces for buying and selling used clothes are, as of this month, obliged to report the income users make from their sites. This information will be shared with other jurisdictions where sellers are resident, according to the measures set out by HM Revenue & Customs, the British tax authority. Any income above £1,000 ($1,267) must be reported and could be liable for taxation, HMRC said. Rules will also apply to sales of other types of goods or services on digital platforms, including Airbnb and Etsy.

The development echoes a 2022 U.S. rules change that income of more than $600 a year from third-party platforms should be reported by taxpayers, much lower than the previous $20,000 limit. At the time, the Internal Revenue Services said there was no change to the taxability of the income, but the lower information reporting threshold allows easier tracking of income received. However, tax officials have twice postponed enforcement of the new rules, most recently last November.  

The crackdown is part of a wider global trend. The Organization for Economic Cooperation and Development has published model reporting rules for the rapidly growing gig economy where users make money from digital platforms selling goods such as secondhand fashion, or services such as car rides. As of last year, European Union member states automatically exchange information about income earned by sellers on digital platforms.

The new rules aren’t expected to apply to many customers. “We expect that most of our sellers are unlikely to owe [U.K.] taxes on their Vinted sales,” said a spokesperson for Europe’s largest online fashion marketplace. The Lithuania-based business overtook eBay in 2021 with a gross merchandise value—a measure of client transactions—of €2.75 billion ($3 billion), representing about a 40% European market share, according to retail association Cross-Border Commerce Europe, cited by trade publication Fashion United. 

Vinted said the British legislation is similar to that being rolled out in many European countries and that it will contact sellers about any steps they need to take. 

Depop, a popular U.K. fashion buying-and-selling app, similarly doesn’t expect the rules to affect many of its users. In 2021 Depop was acquired by U.S. e-commerce business Etsy for $1.6 billion.

Moves to track income from platforms like Vinted and Depop come amid a boom in secondhand fashion. Consumer interest in value for money and a growing awareness of sustainability will continue to power growth in resale, including on customer-to-customer platforms, said Anita Balchandani, fashion lead at consultant McKinsey.

Brands are increasingly operating their own resale channels. Customer-to-customer sales are also thriving: the market in Europe was worth €15 billion in 2022 and could rise to €21 billion by 2026, far outstripping growth in the overall fashion and beauty market, according to a report by Cross-Border Commerce Europe.

The new U.K. regulations are based on the OECD model rules and apply as of Jan. 1 this year, with reporting due from January 2025. Officials said the rules aim to put the squeeze on tax evasion and will predominantly apply to people buying and selling to make a profit rather than those clearing out unwanted goods. The regulations will “mean that tax authorities have similar visibility of income for sellers on digital platforms as they would have with traditional businesses,” HMRC said. 

Write to Joshua Kirby at joshua.kirby@wsj.com