Online sellers and creators: If you fail to report to HMRC expect hefty fines
If you are making an income from creating content or selling a service or product online and you make above £1,000 in a tax year, you need to report your earnings to HMRC via a self-assessment tax return annually, and if required, pay any tax due on your earnings.
Stats show that at least a quarter of online creators and sellers do not report to HMRC currently, but this will need to change going forward as HMRC brings in new rules from 1st January 2024, levying hefty fines on those who do not currently report accurately or indeed at all to HMRC.
What is changing from 1st January 2024?
From the beginning of 2024, online platforms, apps and websites will be legally required to share their client base with HMRC and advise HMRC of earnings or money paid out to individuals. This includes platforms such as Vinted, AirBnB, Etsy, Onlyfans etc
HMRC is investing heavily, reportedly deploying around £40 million and hiring 24 new members of staff dedicated solely to working with online platforms to track down these online sellers and creators, fine them and get them to start reporting their earnings.
This change in law means that non-reporting will be considered tax evasion by HMRC, punishable by heavy fines, levied if an online creator or seller does not step forward and declare their income first and before HMRC contacts them directly.
If this sounds like you, take these next steps
With the end of another tax year coming in March 2024, not to mention before it is a matter of time before HMRC contact you, now is the time to get organised and register for self assessment, if you have not done so already.
It is important to educate yourself on your tax position as an online creator or seller, and keep good records of your incomings and outgoings so you can report accurately via your self assessment tax return.
Tax rules change at least twice a year, and you will have specific questions relating to your specific line of business, so we also recommend you seek professional help and avoid falling down the Google wormhole checking what constitutes an expense or not, for example.
We can help guide you on your responsibilities as an online creator or seller and can also help you complete your self-assessment tax return annually if needed. Please get in touch for a complimentary consultation.