With the calendar year turning and tax deadlines looming, HMRC (His Majesty’s Revenue and Customs) has sent out urgent warnings to millions of taxpayers about the importance of completing self-assessment tax returns to avoid hefty fines. The deadline for submitting these returns is January 31st, and time is running out for approximately 12 million individuals who must file.
Alastair Douglas, CEO of TotallyMoney, emphasized the urgency of the situation: “More than 12 million taxpayers will need to complete their self-assessment returns before the end of the month. And with the clock ticking, there’ll be a spike in people picking up their phones to call the HMRC helpdesk.” Douglas highlighted the historical challenges taxpayers have faced, noting, “Last year taxpayers spent around 7 million hours on hold to HMRC, with an average waiting time of 27 minutes during January.” This year, those figures could rise as procrastination sets in.
For those who still have questions about whether they need to file, HMRC has provided clarity on specific categories of taxpayers. If you were self-employed as a ‘sole trader’ earning more than £1,000 before taxes or if you had total taxable income exceeding £150,000, you are required to submit your tax return. Other situations warranting filing include those collecting rental income, earnings from investments, and even money made through tips or commissions.
But it’s not just employment income and business activity where taxpayers need to read the fine print. HMRC has also taken steps to clarify tax obligations for those selling personal items online following the holiday season. According to HMRC, selling items such as unwanted Christmas presents through platforms like eBay or Facebook Marketplace carries different tax obligations based on the nature of the sales.
HMRC reassured sellers: “You don’t need to pay income tax on selling your own personal items such as used clothes, an old TV, or unwanted furniture. This does not make you a trader.” Nonetheless, sellers need to be careful; if the value of personal possessions sold exceeds £6,000, Capital Gains Tax may apply. Angela MacDonald, HMRC’s Second Permanent Secretary, reiterated this guidance, stating, “We cannot be clearer – if you are not trading and just occasionally sell unwanted items online – there is no tax due.”
Yet for those who do turn their selling efforts from casual to commercial, the rules become stricter. Individuals who purchase goods for resale or make items with plans to sell them for profit should be aware they may need to register for Self Assessment and pay taxes if they exceed the £1,000 income threshold. HMRC has created tools to assist users in determining their tax obligations, advising, “If you regularly sell goods or provide a service through an online platform, HMRC recommends checking the guidance about selling online and paying taxes on GOV.UK.”
Taxpayers should heed the warning issued by HMRC about potential fines for tardiness. A fine of £100 will be imposed for those who file their returns late, and penalties will escalate after three months. Douglas remarked on the pressing nature of filing, stating, “While you might just be getting over a busy Christmas and gearing up for the new year, cracking on with your tax return might not only save you time, but also money.”
With only weeks remaining until the January 31st deadline, many taxpayers feel the pressure mounting. The prospect of long wait times on the HMRC helpline adds another layer of urgency for those needing clarification or assistance. It’s likely many will rush to resolve their tax affairs, reminiscent of last year’s experience.
Taxpayers are left wondering: What do I need to do to comply? HMRC’s warning serves as both guidance and motivation for individuals to tidy up their financial affairs before the deadline arrives. It’s clear—whether they are casual sellers or established business owners, individuals engaging with online sales need to examine their activities and understand their tax obligations.
For those unsure if they need to file, HMRC encourages the use of their online tool, which delineates between casual sales and trading activity. The clarity provided by HMRC aims to alleviate concerns and enable all taxpayers to navigate the complex tax system with greater ease.
Therefore, with self-assessment returns looming on the horizon, taxpayers are strongly advised to act now. Whether it involves sifting through holiday sales or clarifying income from other sources, taking action today could not only save time during peak waiting hours but also help avoid unnecessary penalties as the deadline approaches.