News – 02.12.24
2024 US tax year end planning for Americans in the UK
The 2023 US tax year ends on 31 December 2023, so now is a good time to consider whether there is anything that you can do to minimise your US tax exposure for 2023 and begin preparing for 2024. … Read more
Insight – 02.12.24
Budget 2024: Reform to the taxation of carried interest
Find out more about the changes coming for capital gains tax and carried interest. … Read more
Upcoming event – 10.12.24
Funding innovation in the technology sector: Are the government doing enough?
Join us for an exclusive roundtable breakfast to explore the question of whether the government are doing enough to support innovation in the technology sector. … Read more
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From 1 January 2024, in accordance with the UK signing up to the international body, the Organisation for Economic Cooperation and Development (OECD), these platforms are now required to collect and share information with HMRC, allowing HMRC to determine who it believes is earning taxable income that is not being appropriately declared.
The new rules will mean that these digital platforms will be required to record and report online sales made by its users. Those using such digital platforms to sell clothes online, rent a room in their house, or other ‘side hustle’ activities should therefore carefully review their tax position. The information provided to HMRC will show the users National Insurance Number and the value and volume of transactions, allowing HMRC to determine who it believes should be paying tax.
This approach is part of HMRC’s wider aim to tackle tax evasion and treat digital platforms the same way as traditional businesses. As part of this project, HMRC have already launched specific campaigns to target online sellers and content creators.
There is currently a £1,000 allowance per tax year for trading income, so those earning less than this will not be required to pay tax. However, HMRC may ask for proof that earnings are less than the trading allowance. It's therefore recommended for individuals utilising such digital platforms to generate income to keep adequate records. However, those simply selling odd personal items that are no longer needed or de-cluttering may not necessarily be considered trading, but those with either a high volume or high value of transactions can expect questions from HMRC.
The first information HMRC will receive from these platforms will be on 31 January 2025. Following this, those earning above the trading allowances will receive a letter from HMRC notifying them of their responsibility to declare their income via Self-Assessment going forward, correct their historic tax position, and pay any outstanding tax due.
From 1 January 2024, in accordance with the UK signing up to the international body, the Organisation for Economic Cooperation and Development (OECD), these platforms are now required to collect and share information with HMRC, allowing HMRC to determine who it believes is earning taxable income that is not being appropriately declared.
The new rules will mean that these digital platforms will be required to record and report online sales made by its users. Those using such digital platforms to sell clothes online, rent a room in their house, or other ‘side hustle’ activities should therefore carefully review their tax position. The information provided to HMRC will show the users National Insurance Number and the value and volume of transactions, allowing HMRC to determine who it believes should be paying tax.
This approach is part of HMRC’s wider aim to tackle tax evasion and treat digital platforms the same way as traditional businesses. As part of this project, HMRC have already launched specific campaigns to target online sellers and content creators.
There is currently a £1,000 allowance per tax year for trading income, so those earning less than this will not be required to pay tax. However, HMRC may ask for proof that earnings are less than the trading allowance. It's therefore recommended for individuals utilising such digital platforms to generate income to keep adequate records. However, those simply selling odd personal items that are no longer needed or de-cluttering may not necessarily be considered trading, but those with either a high volume or high value of transactions can expect questions from HMRC.
The first information HMRC will receive from these platforms will be on 31 January 2025. Following this, those earning above the trading allowances will receive a letter from HMRC notifying them of their responsibility to declare their income via Self-Assessment going forward, correct their historic tax position, and pay any outstanding tax due.
As there is some time until HMRC receive the first report from these platforms, there is still time for individuals to review their position and, if necessary, come forward and pay the historic tax due.
It is always best to be pro-active in these matters and preferable to make a disclosure to HMRC rather than respond to an enquiry. This is considered an unprompted disclosure and will significantly reduce any penalties HMRC may charge. Buzzacott can help undertake a full review of your income from digital platforms and guide you through the disclosure process to correct historic tax liabilities and ensure penalties are minimised.
Knowing that income from online activities should be taxed and choosing not to come forward could lead to much higher penalties and, in extreme cases, potentially criminal prosecution.
Alternatively, should your activity be considered a hobby and therefore not taxable, Buzzacott can assist in making such arguments to HMRC and resolving the matter as swiftly as possible.
Call us today on +44 (0)20 7710 3389 or fill in the form below and a member of our team will be in touch. All communications are in the strictest confidence.
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