HMRC has eBay and Airbnb in its Sights

The government is taking aim at online platforms that do not educate their users on the amount of tax that is due.

The government is looking to increase the amount of tax revenue it earns from providers in the "gig economy".

While the platforms to be targeted were not named directly, the most likely candidates are Airbnb, eBay, Etsy and Uber.

Only one in four users of these popular sites are confident they understand the taxes due according to research by HMRC.

HMRC's call for evidence asserted that:

"Many of those earning money through a platform may never have previously made money without an employer to act as an intermediary between them and HMRC."

Other countries such as France, Estonia and Belgium have already decided to tax income from these types of sources in a different way than they would tax ordinary income.

Two new allowances for online income were introduced in 2017, to apply to the 2017/2018 tax year but few are aware of them.

The trading allowance of £1000 applies to activities such as selling your own products online.

The property allowance which is of the same amount applies to activities such as renting out an apartment on Airbnb.

Any income below £1000 is now tax free and does not need to be declared.

Be aware however, that you need to tell HMRC that you want to use the allowance if your earnings breach the £1000 barrier.

HMRC can deem that you are conducting a business rather than a hobby as a business is classified as completing "anything in the nature of trade".

It's important to ensure you are aware of any new changes in the tax system and seek professional advice if necessary.

Westminster Wealth Management is able to assist in putting your personal finances in order, ensuring that your money goes towards building wealth for the future. Contact us today.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.