HMRC is writing to online sellers, gig economy workers and influencers, asking for tax to be paid up for earlier years.
People who make money from the online content they create may not realise that they need to declare that income for tax purposes, where it exceeds £1,000 per year. This rule applies even if there is no tax to pay because the individual’s total annual income is less than their taxfree personal allowance (£12,570).
Individuals who sell goods, or their own services, through an online marketplace also need to declare this income to HMRC where it exceeds £1,000 per year. This will include people who sell items on Ebay or Etsy, as well as Uber drivers and self-employed deliverers. HMRC say that the letters are only being sent where it has information that the recipient has earned more than £12,570 from the online sales, such that tax may be due.
If you get such a letter, don’t assume that further tax is payable. The income reported to HMRC by the online marketplaces will be amounts of gross sales. You may have deductible expenses to set against that sales income, meaning that the net profit figure is much smaller.
The HMRC letter also asks the recipient to make a disclosure using the online digital disclosure service (DDS) facility and return a certificate of tax position within 30 days. Note, however, that there is no legal obligation to complete a certificate of tax position. Also, the declaration on the certificate is not limited to a particular tax year, so you may be asserting that your tax affairs for every earlier year are correct, and this may not be the case.
However, you should reply to HMRC within the deadline, indicating how you will provide the required information.
We can help you with this.
We can also advise you on the best course of action where there is income to disclose for earlier years.