In a New Year initiative, HMRC (Her Majesty’s Revenue and Customs) is intensifying its focus on online sales earnings, potentially leading to almost one in six British workers paying more tax.
The move is part of a global effort by the Organisation for Economic Cooperation and Development (OECD) to combat tax evasion. Notable platforms affected by these regulations include Vinted, Airbnb, and eBay, which are now mandated to collect and share transaction details with tax authorities.
Global Tax Evasion Crackdown: New Rules in Force
Commencing this year, the UK is implementing stringent rules aligned with the OECD’s initiative to crack down on tax dodging. Digital platforms, serving as intermediaries for transactions, are now required to regularly report sellers’ income generated through their sites. This primarily applies to the sales of goods like second-hand clothes or handmade items. Sellers earning above £1,000 annually from these transactions must register as self-employed and submit a self-assessment tax return at the financial year-end.
With one in six British workers currently engaged in the gig economy facilitated by various apps, the implications of these rules are significant. Platforms supporting self-employed or small businesses, where earnings exceed £1,000 from such sales, fall within the purview of these regulations. Failure to disclose previous earnings to HMRC could result in substantial financial penalties.
Expert Insights: Navigating Tax Compliance for Businesses
Alex Till, Chair of the National Enterprise Network, emphasised the importance of seeking professional guidance on tax matters. The National Enterprise Network serves as the primary representative of business support for micro, small, and startup businesses in the UK. Till highlights the critical role of professional enterprise advisers in ensuring compliance and avoiding costly mistakes for entrepreneurs.
“Research shows that working with a professional enterprise adviser leads to better outcomes for startup and micro businesses,” Till stated. “Not only does it help entrepreneurs avoid costly mistakes and remain compliant, but the right advice ensures their business ideas can continue to thrive, increase sales, and grow profitability.”
National Enterprise Network’s Support Initiative
To assist businesses in navigating these changes and finding suitable support advisers, the National Enterprise Network encourages entrepreneurs to explore their business support package options. This initiative caters to self-employed individuals, startups, and micro-businesses, offering independent and impartial advice, training, and mentoring.
Businesses seeking a dedicated business support adviser can refer to the National Enterprise Network’s directory, providing details of enterprise support organisations across the country. For more information, visit National Enterprise Network Directory.