HMRC's new data sharing initiative, which aligns with the OECD's global objective to tackle tax evasion, has been met with mixed reactions from the online sellers ...
It's crucial for online sellers to ensure that their income is accurately reported!
While some see it as a necessary step towards ensuring fair taxation, others are concerned about the potential invasion of privacy and increased scrutiny from tax authorities.
Under this initiative, online platforms such as Etsy, Vinted, eBay, and even social media platforms like Instagram and OnlyFans, are now required to collect sales and income information from their sellers and share it with HMRC!
This means that any income earned through these platforms will now be visible to tax authorities, making it crucial for online sellers to accurately report their income and pay their taxes. It's worth noting that this initiative does not apply to all online sellers.
Only those who earn income through online platforms are required to comply. However, with the rise of the gig economy and side hustles, it's becoming increasingly common for individuals to earn income through online platforms. Therefore, it's important for anyone who falls under this category to understand their tax obligations and stay on top of their finances.
One of the main concerns for online sellers is the potential for their data to be shared with other tax authorities around the world. As part of the global data sharing agreement, HMRC can now exchange information with other tax authorities who have also signed up for the initiative.
This means that if you earn income through an online platform in a different country, the tax authorities in that country may also have access to your income information. This could lead to potential tax implications and must be taken into consideration when reporting your income and paying your taxes.
HMRC has already started compliance checks on the highest reported earners in previous years, even before the first full year of data is due to be reported in January 2025. This means that online sellers who have not accurately reported their income in the past may already be under scrutiny.
"It's crucial for online sellers to ensure that their income is accurately reported!"
It's also important to note that this initiative applies to all types of income, not just traditional sales. Services provided through online platforms, such as Uber, Deliveroo, and Airbnb, are also subject to reporting. This means that if you earn income through these platforms, you must also ensure that it is accurately reported and taxed accordingly.
Online sellers must also consider the currency in which their income is earned. With the global nature of online commerce, it's common for individuals to earn income in different currencies. When reporting this income to HMRC, it must be converted to GBP, which could have an impact on the final tax liability.
"HMRC's new data sharing initiative is a significant step towards tackling tax evasion!"
As online commerce continues to grow, it's important for tax authorities to have access to all relevant information to ensure fair taxation. Online sellers must now be aware of their tax obligations and stay on top of their finances to avoid any potential compliance checks or penalties.
By accurately reporting their income and paying their taxes, online sellers can continue to thrive in the ever-evolving world of online commerce.
Until next time ...
HELEN BEAUMONT
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about accurately reporting your online seller activity, it may be a great idea to give me a call on 01908 774323 and let's see how I can help you.
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
No unauthorised use, duplication, distribution or modification to any original content contained within this blog is permitted without prior written permission of the author. All other trademarks and registered names are acknowledged.
