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The taxman is coming

All Areas > Legal & Finance > Money Matters

Author: Roger Downes, Posted: Thursday, 25th January 2024, 09:00

‘Tax is a self assessment’ is one of the phrases I use commonly when providing tax advice to clients. It’s often in response to a question as to whether you have to pay tax on certain income. ‘The taxman isn’t really interested in my measly income’ comes the reply. Well, that may no longer be the case.

HMRC is clamping down on what it sees as abuse of the tax system by those selling goods and services through online platforms. By this time next year, websites including eBay, Vinted, Amazon, Gumtree, Etsy and Airbnb will be providing information direct to HMRC on sales through those platforms. The taxman is coming!

All non-disclosures of taxable income are technically tax evasion

But surely this isn’t really going to help with tax evasion is it? Aren’t there more important things for the taxman to be pursuing? I can just hear the questions now.

All non-disclosures of taxable income are technically tax evasion in the widest sense. Is it easier or better for HMRC to track down 10 omissions of £100 each rather than one of £1,000? That’s clearly the approach HMRC has decided to take; we’ll have to wait and see how much it adds to the Treasury’s coffers.

You are allowed to claim £1,000 a year against trading income

There are exemptions that can help you, which will clearly assist the occasional transaction rather than the serial seller. Firstly, you need to have carried out 30 transactions before your information is reported to HMRC. This will exempt those who deal only on the odd occasion and many of those renting their rooms on sites such as Airbnb.

You will be deemed by HMRC to be trading if they are given your information. However, you are allowed to claim £1,000 a year against trading income, essentially providing an exemption of the first £1,000 of your trading income. So all is not lost.

HMRC has given sellers and the platform providers the heads-up a year ahead of implementation in an effort to ensure a smooth introduction and, as they see it, to maximise their take.

You have been warned!

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