Smith Allen Chartered Accountants

As digital platforms continue to grow, more individuals and businesses are generating income through online sales, services, and content creation. HMRC has recently updated its guidance, reminding those earning income via online marketplaces, social media, or rental platforms of their tax obligations. At Smith Allen Chartered Accountants, we are here to help you navigate these rules, ensuring full compliance and avoiding potential penalties.

Do You Need to Declare Your Online Income?

If you receive income through an online platform—whether as your primary earnings or a side hustle—you may need to report it to HMRC. Income can include cash, gifts, or services from activities such as:

• Selling personal possessions or goods
• Providing services, such as tutoring or freelance work
• Creating online content, including influencer marketing
• Renting out property or land via digital platforms

While some individuals may not owe tax on personal sales, those making a profit or trading regularly must assess their tax obligations.

Key Areas of Tax Consideration

Selling Personal Possessions

If you sell unwanted personal items, such as clothes or furniture, you typically do not need to pay Income Tax. However, Capital Gains Tax may apply if a single item or a set of items is sold for more than £6,000. For example, selling a valuable painting for a profit could trigger a tax liability.

Selling Goods for Profit

Individuals buying items with the intent to resell, or producing goods for sale, may be considered traders by HMRC. This applies to activities such as upcycling furniture, reselling second-hand goods, or importing products for resale.

Providing Services Online

If you earn income through services such as food delivery, babysitting, dog walking, or equipment rental via an online platform, you are required to report this income. Even occasional service provision could qualify as taxable income.

Creating Online Content

Social media influencers, content creators, and video bloggers receiving payment, gifts, or sponsorships for their work must declare this as taxable income. This includes ad revenue, free products in exchange for promotions, and affiliate commissions.

Renting Out Property or Land

If you rent out a property, spare room, or even your driveway through online platforms, this income must be reported. You may be entitled to tax reliefs such as the Rent-a-Room Scheme, but proper reporting is essential.

How Smith Allen Can Help

Understanding tax obligations for online earnings can be complex, but Smith Allen Chartered Accountants provides expert guidance to help you:

• Determine whether your income is taxable
• Identify applicable tax reliefs and allowances
• Accurately report earnings to HMRC
• Avoid penalties for non-compliance

If you generate income online and are unsure about your tax obligations, get in touch with our team today. We can help you stay compliant and manage your finances efficiently.