Online traders warned to check tax return status

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Traders on online platforms such as Airbnb, eBay and Vinted should check whether they need to file self-assessed tax returns by the Jan. 31 deadline to avoid potential penalties. Tax experts warn.

The rules governing who must report trading income remain unchanged, but this month for the first time digital platforms will report sales data to UK tax authorities for those who meet certain criteria.

Since last year, online platforms have been required to report the sales of anyone who offers paid services on their website or app and has sold at least 30 products or earned around £1,700 by 2024. . The first report will be sent to HM. Please submit your income and customs duties by the end of January.

The reporting changes sparked widespread panic last year after inaccurate claims that a “side hustle tax” was being introduced.

Experts said anyone who has not correctly reported the trading income earned on the platform should do so now.

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Fiona Farney, partner at accountancy firm Blick Rothenberg, said: ‘HMRC will compare the reports it receives with self-assessment records to determine whether online sellers paid the correct amount of tax on the income and gains they received. I will judge.”

“If you fail to register (for self-assessment), you will be subject to a penalty of 20 per cent to 70 per cent of the tax owed, plus tax payable, if HMRC determines that the action was ‘deliberate but not concealed’. Significant interest may be charged if the transaction is delayed. “

The platform does not report information on people who sell less than 30 items or £1,700 per year. On the other hand, HMRC does not consider the casual sale of unwanted personal items to be taxable.

However, if people regularly sell goods or services on the platform with the aim of making a profit (unless their gross income before expenses in the tax year is less than £1,000), HMRC will consider trading them as If you are eligible, you will be required to file a tax return.

HMRC’s deputy chief executive, Angela Macdonald, said: ‘I cannot be more specific, but if you are not trading and only occasionally sell unnecessary items online, you will not pay tax. It doesn’t cost anything.”

Andy Wood, an adviser at advisory firm Tax Natives, added: This doesn’t mean you automatically owe taxes or have to fill out a tax return, but check to see if what you’re doing counts as taxable income. It will be a great memory for you. ”

Dawn Register, tax dispute resolution partner at accountancy firm BDO, says: “When and how do you pay tax on side income or profits you make through side hustles, such as selling products online or making money online? There’s a lot of confusion about what they should do.” Social media content.”

He suggested people use a tool developed by HMRC to help online sellers determine whether they need to file a tax return. Although filing a tax return will only be required for the 2023-2024 tax year, the Register encouraged those who have not previously filed a return for their online trading income to do so.

That way, she says, “we can avoid severe shocks in the future.”

“Unpaid taxes from previous years can be subject to late interest (currently 7.25%) and/or penalties, depending on the nature of the reason for non-compliance, so it is often beneficial to come clean early.” ,” Register added. .