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Merchants on on-line platforms comparable to Airbnb, eBay and Vinted ought to examine whether or not they should submit a self-assessment tax return earlier than the deadline on January 31 to keep away from potential fines, tax consultants have warned.
Though the foundations governing who should report buying and selling revenue haven’t modified, digital platforms will this month for the primary time report gross sales information for these assembly sure thresholds to the UK tax authority.
Since final yr, on-line platforms have been required to report the gross sales of anybody who has offered a paid-for service on their web sites or apps and offered not less than 30 objects or earned round £1,700 in 2024. The primary reviews will likely be despatched to HM Income & Customs by the top of January.
The reporting change triggered widespread panic final yr after inaccurate claims {that a} “facet hustle tax” was being launched.
Consultants mentioned that individuals who haven’t appropriately reported the buying and selling revenue they’ve made on platforms want to ensure they now accomplish that.
“HMRC will evaluate the reviews they obtain with their self-assessment data to find out if on-line sellers have paid the correct quantity of tax on the revenue or positive aspects obtained,” mentioned Fiona Fernie, a associate at accountancy agency Blick Rothenberg.
“A failure to register [for self-assessment] can lead to penalties of between 20 per cent and 70 per cent of the tax due the place HMRC judges the behaviour to have been ‘deliberate however not hid’ plus important curiosity fees the place tax is paid late.”
Platforms is not going to report the knowledge of anybody making gross sales of lower than 30 objects or £1,700 a yr. In the meantime, HMRC doesn’t think about promoting undesirable private objects casually as taxable.
But when folks repeatedly promote objects or providers on platforms with a view to creating a revenue — except their gross revenue earlier than bills is £1,000 or much less in a tax yr — then HMRC will think about them to be buying and selling they usually should submit a tax return.
Angela MacDonald, HMRC’s deputy chief government officer, mentioned: “We can’t be clearer — in case you are not buying and selling and simply sometimes promote undesirable objects on-line — there is no such thing as a tax due.”
Andy Wooden, an adviser at Tax Natives, an advisory agency, added: “The £1,700 or 30-item threshold is solely the purpose the place platforms report your gross sales information to HMRC. It doesn’t routinely imply you owe tax or must fill out a tax return, nevertheless it’s an awesome reminder to examine if what you’re doing counts as taxable revenue.”
Daybreak Register, a tax dispute decision associate at accountancy agency BDO, mentioned there had been “a substantial amount of confusion round when and the way folks must pay tax on additional revenue or positive aspects earned by way of facet hustles comparable to promoting items on-line or incomes cash by way of social media content material”.
She advised folks use a tool HMRC has developed to assist on-line sellers work out whether or not they’re required to file a tax return. Whereas persons are solely required to submit a tax return for the 2023-24 tax yr, Register really helpful anybody who had not beforehand filed a return for on-line buying and selling revenue for earlier years to take action.
Doing so would “avert any nasty shocks later down the road”, she mentioned.
“Unpaid tax from earlier years could also be topic to late fee curiosity — at present at 7.25 per cent — and penalties, relying on the character of the explanations for non-compliance, so it typically pays to return clear at an early stage,” Register added.
