Individuals using online selling platforms as ‘side hustles’ to boost their income or make a living are being warned of an HMRC crackdown due to come into force soon.
Websites such as Vinted, eBay and Airbnb had until the end of last month to tell HMRC about how much their users have earned in 2024.
That means more people could be liable to pay more tax on top of the rate imposed on their existing earnings or in some cases be forced to register with the authority as a sole trader.
Ian Parker, Director at accountants and business advisors Whitley Stimpson, said:
“Online trading has become increasingly popular in recent years as it is a useful way of providing additional income and some even make a living out of it. However, there are potential tax implications and anyone not aware of this or turning a blind eye to their liabilities needs to act now before HMRC tracks them down.”
That said, everyone has a trading allowance of up to £1,000 under which they do not have to pay tax on the proceeds.
Once income exceeds that they need to register as a sole trader with HMRC and submit a tax return. Tax will only be payable once their total income exceeds the current personal allowance of £12,570 a year.
Further confusion could come as HMRC is asking online firms to provide income details for individuals for the whole of 2024 but any tax payable will only apply to the end of the last tax year on 5th April 2024.
This had to be paid by 31st January, but HMRC grant all new self-assessment sign-ups a three-month submission window from the date of registration – extending beyond the deadline. Beyond this date no tax will be applicable until the end of the current tax year on 5th April.
Ian added:
“All this could be worrying for anyone who has not paid tax before and is making more than £1,000 a year from a side hustle or who is making significant amounts on top of their regular income. I would urge anyone who is concerned about this to get in touch with us and we will look after the details and make sure they don’t receive an unnecessary fine.”
For further information contact Ian Parker.