You might be wondering whether you have to do anything about the income you make from your eBay listings or your Etsy shop? Maybe it is just a hobby and you don’t need to worry about it? Our experts at DSR Tax Claims are here to help you work out where you stand with regard to any income you earn from your online selling activities. Check out our handy guide or call our friendly team on 0330 122 9972 and let us put you straight.
Do you need to pay tax on your online sales income?
You may see it as a bit of a hobby, just making a bit of pocket money on the side, but HMRC will most likely view it differently. If HMRC think you are running a business and making an income from that business, they will want to know all about it through a self-assessment tax return. And if they think you are trying to pull the wool over their eyes, you could end up in serious trouble with HMRC. If you are making enough income and you are making it regularly, you could be liable to pay tax on that income.
What if you already pay tax through PAYE?
If you are an employee who pays tax through the PAYE (Pay As You Earn) system, you might think that you are covered and you don’t need to pay any more. Unfortunately, that isn’t true. Your PAYE tax only takes into account the income you earn from your main job. Many people have other sources of income on top of their main job – such as rental income or income from savings and investments – and money earned through online selling also counts. HMRC introduced a rule in April 2017 which states that online sellers can earn £1,000 from their online sales before they have to inform HMRC about their income – but above that, you really must inform HMRC.
Unfortunately, people do get caught by HMRC every day, risking penalties, fine and even prison time, for not declaring their online sales income – make sure you’re not one of them.
How you declare your income?
You will usually need to use the self-assessment system to declare the money you are making through online selling. This means you will need to get a UTR (Unique Tax Reference) number from HMRC and set up an account with them. You will then need to fill in a self-assessment form each year. However, you will be able to deduct any expenses related to running your online business from any tax you might owe to HMRC so it isn’t as bad as it sounds. Tax experts, like our team at DSR Tax Claims, can make sure that you only pay what you owe and not a penny more – get our expert advice by calling 0330 122 9972.
What happens if HMRC contact you?
We know it can be very worrying to receive a letter from HMRC but it is important not to bury your head in the sand and ignore it. It makes good business sense to keep detailed records of your incomings and outgoings so that you can get through a HMRC enquiry without too much bother. It can also be of great assistance to get expert help, like the help our team of tax preparation specialists can offer – we can help you with your HMRC enquiry.
It’s always worth getting the advice of tax experts. Our friendly team at DSR Tax Claims are the tax experts you can trust – call us today on 0330 122 9972 and let us put our expertise to work helping you.