HMRC Issues January 31 Tax Warning Amid Concerns Over Confusion

HMRC has raised alarms about potential confusion over new tax rules for side hustles

HMRC Issues January 31 Tax Warning Amid Concerns Over Confusion
HMRC Issues January 31 Tax Warning Amid Concerns Over Confusion

London: A charity is sounding the alarm as HMRC rolls out new tax rules aimed at people earning money from side gigs. This includes everything from selling stuff online to dog walking and even babysitting.

Platforms like eBay and Airbnb have until the end of the month to report earnings for 2024. This could mean some sellers might end up with a tax bill. If you’re making a decent amount, you’ll need to fill out a Self Assessment tax form, which HMRC will check against what these platforms report.

These sites must inform HMRC if someone earns over £1,700 in a year or completes 30 transactions. Plus, there’s a trading allowance of £1,000, meaning if you earn more than that, you’ll need to file a tax return.

The charity, Low Incomes Tax Reforms Group (LITRG), is worried about the confusion this could cause. The UK tax year runs from April to April, but the reporting period for these platforms is January to December. This mismatch could lead to people using the wrong figures on their tax returns.

Meredith McCammond from LITRG pointed out that only a quarter of the data people receive will be relevant for their current tax return. This could be especially tricky for first-time filers who might need extra help during HMRC’s busiest time.

Dawn Register from BDO mentioned that these date differences mean HMRC might not get accurate data. However, it could still help them spot if someone is trading and potentially trigger a tax investigation if they see high earnings.

She warned that some people might face unexpected tax bills if they’re not aware of the new rules or are trying to dodge taxes on their earnings. HMRC might also be surprised by how much some individuals are making online.

HMRC has an online tool that asks basic questions about what you’re selling and your income. If you’re making over £1,000, you’ll need to fill out a self-assessment tax return, even if you don’t owe any tax.

An HMRC spokesperson clarified that if you’re just selling unwanted items from your home, you probably won’t owe any tax. But if you’re trading or making a profit, you might be liable.

They added, “For people selling personal possessions online, absolutely nothing has changed. If you’re not trading and just occasionally sell unwanted items, there’s no tax due.”

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Xavier Marlega is a dedicated journalist with a knack for exploring current events and social issues, always providing meaningful insights in his work.