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People who may not know they need to file a tax return for the first time are being warned to check their position and register for self-assessment by the deadline of October 5, or risk potential fines and penalties.
Those who may need to file a tax return for the first time include newly self-employed people, new landlords, new partners in business partnerships, those who earned more than £150,000 during the year, people affected by the high-income child benefit charge and those using online platforms to generate income.
Advisers are particularly worried about the latter group who include gig economy workers and people with so-called “side hustles” because they will also be affected by new platform reporting rules, that sparked panic earlier this year.
Tax experts say anyone using online platforms to sell goods, arranging short-term property lets or securing private hire or food delivery work should ensure they accurately report their earnings and register for a tax return, if required.
12.1mnThe 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 cross check individuals’ declarations against data received from online platforms.
“It’s very important that if you are required to file for the first time that 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 HMRC’s eyes.”
Under regulations that came into effect on January 1, platforms such as Amazon, Airbnb, Deliveroo, eBay, Uber and Vinted are required to collect and report seller information and income to the UK tax authority. The first reports will be sent to HMRC by the platforms in January 2025.
Platforms will not be required to report the details of those using their sites or apps who make 30 or fewer sales a year and sell items for less than a total of €2,000 (approximately £1,700).
The rules which are part of an international reform agreed in 2020, came into force in a number of countries this year, and will mean data is shared internationally between tax authorities.
Experts at the Low Income Tax Reform Group, a charity, accused HMRC of not doing enough to make online sellers aware of the fact 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 of the new reporting rules caused widespread confusion and the misconception that a new “side-hustle” tax had been introduced.
Claire Thackaberry, LITRG technical officer, said time was “running out for HMRC to defuse this ticking time bomb”.
“The information that HMRC will receive from platforms will be presented by calendar year, therefore covering more than one tax year,” she said.
“This could make it more difficult to work out when tax is 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 harder to speak with someone.”
She urged HMRC to work with platforms and online sellers to help people understand and meet their tax obligations in time.
HMRC described LITRG’s points as “scaremongering”.
The tax authority added: “For people selling personal possessions online absolutely nothing has changed, so it’s deeply disappointing to see this scaremongering from LITRG.
“We’ve recently published and promoted guidance for online sellers and we run an extensive self assessment campaign every year, which reminds people to check if they need to file a tax return.”
The deadline for telling HMRC you need to file a tax return for the 2023-24 is October 5. Paper returns must be filed by October 31 and the deadline for submitting an online return is midnight on January 31 2025.