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People who may not know they need to file a tax return for the first time are warned to check their position and register for self-assessment before the October 5 deadline, or risk potential fines and penalties.
Those who may need to file a tax return for the first time include new self-employed people, new owners, new partners in business partnerships, those who earned more than £150,000 during the year and people affected by the benefit charge by high-income dependent children. and those who use online platforms to generate income.
Advisers are particularly concerned about the latter group, which includes gig economy workers and people with so-called “side jobs,” because they will also be affected by the platform’s new reporting rules, which provoked panic earlier this year.
Tax experts say anyone using online platforms to sell goods, arrange short-term property rentals, or land a private contract or food delivery job should make sure they accurately report their earnings and register for a tax return. , if necessary.
12.1 millionThe number of self-assessment tax returns filed in the 2022-23 tax year
From next year, for the first time, HM Revenue & Customs will be able to match people’s returns with data received from online platforms.
“It is very important that, if you are required to apply for the first time, you meet the October 5 deadline to register with HMRC,” said Dawn Register, head of private client services at BDO, an accountancy firm. “Ignorance of the rules will not always be an acceptable excuse in the eyes of HMRC.”
Under regulations that came into force on January 1, platforms such as Amazon, Airbnb, Deliveroo, eBay, Uber and Vinted must collect and report seller information and income to the UK tax authority. The platforms will submit the first reports to HMRC in January 2025.
Platforms will not be required to report details of those who use their sites or apps and make 30 or fewer sales a year and sell items for less than a total of €2,000 (approximately £1,700).
The rules, part of an international reform agreed in 2020, came into force in several countries this year and will mean data will be shared internationally between tax authorities.
Experts from the Low Income Tax Reform Group, a charity, accused HMRC of not doing enough to make online sellers aware of the fact that they may need to file a tax return and pay tax on their online trading income. .
They called on HMRC to avoid a repeat of what happened earlier this year when reports about the new reporting rules caused widespread confusion and the misconception that a new “lateral” tax had been introduced.
Claire Thackaberry, technical officer at LITRG, said “time was running out for HMRC to defuse this ticking time bomb”.
“The information that HMRC will receive from the platforms will be presented on a calendar year basis, so will cover more than one financial year,” he said.
“This could make it more difficult to determine when taxes are due. Many people will turn to HMRC for help. However, January is an extremely busy time for HMRC ahead of the self-assessment tax return deadline and this will make it more difficult to speak to anyone.”
He urged HMRC to work with online platforms and sellers to help people understand and meet their tax obligations on time.
HMRC described LITRG’s points as “alarmist”.
The tax authority added: “For people selling personal items online, nothing has changed at all, so it is deeply disappointing to see this scaremongering from LITRG.
“We have recently published and promoted guidance for online sellers and each year we run an extensive self-assessment campaign, reminding people to check whether they need to file a tax return.”
The deadline to inform HMRC that you need to lodge a tax return for the period 2023-24 is 5 October. Paper returns must be filed by October 31, and the deadline to file an online return is midnight on January 31, 2025.