HMRC – and your eBay account!
HMRC wants accommodation and auction sites such as Airbnb and eBay to hand over customer details in a bid to crack down on people who rent out a room or sell items online to make some extra cash.
The aim is to clamp down on those who fail to declare profits from such activities and so avoid paying income tax or VAT.
To some this is HMRC’s way of taking its Big Brother approach on-line to crack down further on the small man – rather than aim for the big players!
The taxman already monitors local parks where personal trainers work, car boot sales and the small ad’s in weekly local newspapers for services etc. It is now looking to extend its intelligence gathering into the digital age.
The message on this is clear:
If you are selling off a few old personal possessions on eBay – there is no problem. However, if you are buying items with the intention of selling them for gain you will need to declare the profit made and pay the resulting tax liability.
If you rent a room out in your own home and the rental income is below £7,500 per annum, (£625 per calendar month) – there is no problem, as this is covered by the Rent-a-Room allowance. Please note however, that this tax free allowance was set far lower before 6 April 2016; the allowance for 2015/2016 being only £4,250 per annum (£354 per calendar month). If the income you receive is above the current allowance, or if you rent out a second home or your own property when you are not there – then you will need to declare this income and pay the tax due.
The eBay message in particular, is one that could come as an unpleasant surprise, as many people believe that buying and selling items in which they have a keen interest is a hobby and not a taxable activity. Not so HMRC would contend – the very act of buying something with the intention of selling it on – is strongly indicative of dealing in an item for gain – which would constitute a trade for tax purposes.Talk to Barnes Roffe today