Tax Compliance For People Making Money Online

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November 21st 2019
Tax Week 33
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Tax Compliance For People Making Money Online

Government wants to know how people are making money through online platforms and whether they are aware of their tax obligations.

The government is looking to crack down on online platforms that allow activities such as:

  1. Sharing things for money - e.g. AirBNB (Accomodation sharing), Turo (Car sharing), etc.
  2. Gig economy - e.g. Uber (Sporadic Driving Jobs), Deliveroo (Sporadic Fast food delivery), etc.
  3. Marketplace - e.g. Ebay (Actual regular trading not just selling unwanted items from time to time), Amazon Marketplace, etc.

The new three month consultation starts with the government looking to gather evidence on how people are making money through online platforms, what these online platforms know about people trading through them, and gather information on people who may abuse the tax system using these platforms.

A quarter of people using online platforms to trade are not aware of their full tax obligations and most people using online platforms have never had to handle their own tax obligations as they have been previously paid via employer controlled systems like PAYE. Another bit of research found over half of those trading in a secondary role may not recognise that the income generated is liable to tax. These people are currently allowed certain allowances of up to £1,000 before the secondary work they do becomes liable to tax, but may not be aware of that either:

  1. £1,000 tax-free for online trading turnover.
  2. £1,000 tax-free for very short-term property lets.

One of the avenues HMRC is exploring is to use their bulk data gathering powers to obtain data directly from the online platforms through to the payment providers. These powers have been available to the Taxman since the 2016 Finance Act and could be used if the platform is fully UK-based.

This could help to prefill tax returns on behalf of people trading online and notify them of their liabilities in advance.

The consultation is over this June and results are to be discussed in the Autumn 2018 Budget.

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