3 Things You Never Knew You Needed to Tell HMRC About (And Why It’ll Make Your Life Easier if You Do)
Sometimes, it can feel like it’s all we can do just to get by in our day to day lives. The cost of living is rising with inflation but our wages are not rising to meet them. In an era where public sector workers have experienced years of pay freezes and workers in a range of industries experience the longest sustained period of wage repression since records began, it’s little wonder that many working parents turn to a range of side hustles to supplement their income. After all, why shouldn’t we make a little more money so that we can save for our kids’ futures and do our best to improve their quality of life? But while this entrepreneurial spirit is admirable, it can come with severe consequences if we don’t declare this additional income to HMRC rendering it all for nought.
If you make money from any of the following you may not have known that you have to declare it;
Rental income (even if you don’t make a profit)
Lots of people rent out a second property but do not declare this additional revenue because they either did not know that they had to or did not consider it worth the effort since after the letting agents’ costs have been paid and the myriad expenses that come with being a landlord have been settled there’s not much profit to speak of at the end of it.
The truth, however, is that all rental income needs to be declared to HMRC (as do your expenses). Whether you’re self-employed or salaried this needs to be declared, but the Let Property Campaign (LRC) can help you here. Indeed, some of your losses may even be tax deductible or offset against future deductions. It’s worth noting that if you don’t disclose this information voluntarily, HMRC have the power to force letting agents to give them your details and you will have to make a “prompted disclosure” which will not be favourable for you.
You are also obliged to declare income from the sale of property, shares or other commodities such as precious metals, Forex or even cryptocurrencies to HMRC. Capital Gains Tax is a slightly different animal to income tax or National Insurance that all self-employed people must pay but they still must be paid on anything above your annual tax-free gains allowance of £11,700 a year. This also includes any money gained from quarterly share dividends.
Selling bulk items on eBay
Most of us sell the odd book or DVD on eBay or Amazon marketplace without thinking twice about it and this is generally absolutely fine, but if you sell a lot of items over eBay or other online listing or auction sites, this may count as capital gains for which you will be liable.
While it may be tempting to hold off on declaring this income in the hopes that HMRC will never find out, it’s actually staggering how sophisticated the tools that they have in their disposal to identify underpaid tax can be. If they catch you out you will have to pay back all tax owing plus a monetary fine, while if you declare this income you will find them far more reasonable.
For more on tax check out this blog post here.
*This is a collaborative post. For further information please refer to my disclosure page.
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