MARTIN Lewis has warned those with an eBay account to make a check now or risk being hit with a shock bill.
The founder of MoneySavingExpert.com (MSE) has explained how eBay will be forced to report how much certain sellers earn to HMRC.
PAMartin Lewis has warned those with an eBay account to check their earnings[/caption]
Since Monday, digital platforms, including eBay, Airbnb, Etsy, Amazon and Vinted, must share seller information with HMRC as part of a crackdown.
Firms only have to pass on data to HMRC if you sell 30 or more items a year or if you earn over £1,700 – check now if this applies to you.
This is because anyone selling items online has to pay tax if they earn £1,000 or more.
But new rules introduced on Monday mean marketplaces now have to pass on seller’s earnings directly to HMRC.
It is part of a wider tax crackdown to help ensure that those who boost their income via side hustles pay up what they owe.
This isn’t a new tax. Those who earn over £1,000 have always had to declare income and fill in a self-assessment tax return, but it gives the taxman greater visibility over what you earn.
You’re unlikely to be affected if you only sell a handful of second-hand items online each year.
On Wednesday evening, Martin tweeted: “Sell on eBay, Etsy or Vinted or rent your home on Airbnb?
“Firms will now report some earnings to HMRC, so check if yours will be and if you need to pay tax.”
Along with his post, Martin shared an article on the MSE website.
It said: “If you sell goods online on sites such as eBay, Etsy or Vinted, rent out your home on Airbnb, or earn extra income from providing services via platforms including Deliveroo or Uber, then these firms will soon start passing on information about you to HMRC.”
Who is affected?
You’ll be affected if you sell 30 or more items yearly through online marketplaces or earn over £1,700.
Your seller information will be automatically shared with HMRC.
However, even if you earn less than £1,700 a year you may still have to pay tax.
Income tax is normally due once your income from self-employment hits £1,001 during a single financial year.
So, if you earn £1,001 by selling second-hand items online, you will still be required to complete a self-assessment tax return as normal.
If the total amount you earn via a platform in a tax year is £1,000 OR less, you won’t need to tell HMRC or pay any extra tax.
How do you know if you need to submit a tax return?
Self-assessment is a system HMRC uses to collect income tax.
Tax is usually deducted automatically from wages, pensions and savings, but people and businesses with other incomes must report it in a tax return.
This applies to the following:
Your income from self-employment was more than £1,000
Earned more than £2,500 from renting out property
You or your partner received high-income child benefits, and either of you had an annual income of more than £50,000
Received more than £2,500 in other untaxed income, for example, from tips or commission
Are limited company directors
Are shareholders
Are employees claiming expenses over £2,500
Have an annual income over £100,000
Before you can complete and submit your tax return, you must have a so-called unique taxpayer reference (UTR) and activation code from HMRC.
This can take a while to receive, so if it’s the first time you’re completing a self-assessment, register online immediately and ask HMRC for advice.
To sign in or register, visit the “Self Assessment tax return” section of HMRC’s website.
If you’ve already signed up for self-assessment, you can find your UTR in relevant letters and emails from HMRC.
HMRC accepts your payment on the date you make it, not when it reaches its account – including on weekends.
The deadline for filing your self-assessment tax return by post is October 31.
If you miss the deadline by up to three months, you will be charged a £100 penalty.
If you miss the deadline by over three months, you will be charged more.
But don’t worry. You can complete your tax return online if you don’t send your paper form on time.
You have to do this by January 31, 2024.
If you need to change your tax return after filing it, you can do so within 12 months of the original deadline or write to HMRC for any changes after that.
Filling in your tax return can seem daunting, but with our step-by-step guide, you’ll have it sorted quickly.
How much can I be fined for filing my taxes late?
Late filing fees are pretty steep, so make sure you get your self-assessment return in before January 31.
According to HMRC, you’ll get a £100 fine for failing to file your return a day after the deadline.
Then, a £10 daily fine applies every day you don’t submit your tax return.
This is capped at 90 days – or £900.
So, on top of the initial £100 fee, a £1,000 maximum late filing fine applies.
If you’re six months late, there’s a further £300 fine or 5% of the money you owe – whichever is higher.
That’s on top of the daily £10 charges built up so far, so there’s no shortcut to a smaller payment once you’re late.
And after 12 months, another £300 or 5% fine applies.
Interest is also added on top of this.
If you deliberately haven’t filed your tax return, a fine of up to 100% of the tax due could also be sent.