Income from selling services online

Our experts tell you how to treat your online income for tax purposes

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust. Or you can check out our online calculator to see if you could be due a refund.

What does HMRC mean by ‘selling services online’?

If you use any websites or apps to sell certain services, you may need to declare that income and pay Income Tax.

 

By ‘selling services online’, HMRC is referring to websites and apps you might use to:

  • Rent out your home to tourists, like Airbnb
  • Renting out any of your property (such as business premises or your home) for business purposes
  • Renting out any of your personal equipment, such as tools
  • Offering to perform services or tasks, such as cleaning, odd jobs or beauty treatments.

 

Just because this isn’t your main job, it doesn’t mean that HMRC won’t expect you to declare it or pay any tax you owe on that income. Sometimes these online services are called ‘peer-to-peer (P2P)’ businesses, or part of the ‘sharing economy’.

 

Do you have to pay tax on these services?

If you make a profit on these services and your total taxable income, including this profit, is above your tax-free Personal Allowance you will have to pay tax on this income. You are allowed to deduct any allowable business expenses from providing these services from your taxable income – for example, if you have to pay any fees for listing your services online, you can deduct these from the profits you make.

 

When wouldn’t you pay tax on these services?

If you occasionally sell some of your personal possessions online, you aren’t expected to pay Income Tax on any money you make. Depending on what kinds of items you are selling, you might have to pay Capital Gains Tax though – this is payable on valuable assets, like antiques.

 

You also wouldn’t be expected to pay Income Tax if you were only covering your own costs with any money you made, so for example, if you were part of a car pool and you received money from that, you wouldn’t pay tax if you were just covering your costs from taking part in the car pool.

 

If you are renting a furnished room in your own home to a lodger, then you might not have to pay tax if you are eligible for the ‘Rent a Room’ tax relief scheme. If you earn less than £7,500 by renting this kind of accommodation, you won’t have to pay Income Tax on your rental income (you would need to halve this £7,500 threshold if you are sharing the income with a partner or someone else).

 

If you’re not sure whether you should be paying Income Tax on any income you receive, you can call the HMRC Income Tax helpline on 0300 200 3300 (textphone 0300 200 3319) to check. Phone lines are open between 8am and 8pm Mondays to Fridays, 8am to 4pm on Saturdays and 9am to 5pm on Sundays.

 

What happens if you do need to pay Income Tax on this income?

If you have worked out that you do need to pay Income Tax on the income you receive from selling services online, because all of your taxable income added together is more than your Personal Allowance, you will need to contact HMRC. You might have to complete a Self Assessment tax return or declare your income to HMRC in another way. It depends on how much untaxed income you have from these online services. If it is less than £2,500 you probably won’t need to complete a Self Assessment tax return but will still need to inform HMRC of the income.

How can DSR Tax Claims help?

We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful.  Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax rebate. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

This page was last updated on 26/10/2018.

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