January Questions and Answers
Newsletter issue – January 2025
Q: I use various online marketplaces to sell my unwanted items - from clothes to old phones and various other things. I'm a bit concerned though by stories I've read in the media that rules are changing and I may have to start filing a tax return. That's not something I've ever had to worry about before. Can you help me understand if my fears are justified?
A: There has been a lot written in the papers over the last year or so about this issue and, with the angle that we see often taken in these reports, it's understandable that people like yourself could feel worried about the implications. Millions of people do what you do. It's become an everyday activity to sell second hand things online.
However, HMRC has become so concerned itself about what it feels are misleading stories in the press, that it's recently issued a long statement to try to reassure and clarify the matter.
The HMRC website stated: 'People selling unwanted items online can continue to do so with confidence and without any new tax obligations.'
The reason these concerns have arisen is due to the fact that a new process is taking effect in January. It means online platforms have to share certain sales data with HMRC.
These new measures 'generated inaccurate claims that a new tax was being introduced,' officials said, adding that 'absolutely nothing has changed for online sellers'.
However, you and others do need to be aware that if you're buying goods for re-sale or make things with the intention of selling for profit and you garner a total income from this activity of over £1,000 in one tax year (before deducting expenses), you may need to register for Self-Assessment and fill out a tax form.
HMRC stated: 'Those who sold at least 30 items or earned roughly £1,700 (equivalent to €2,000), or provided a paid-for service, on a website or app in 2024 will be contacted by the digital platform in January to say their sales data and some personal information will be sent to HMRC due to new legal obligations.'
Angela MacDonald, HMRC's Second Permanent Secretary and Deputy Chief Executive Officer, had this to say: 'We cannot be clearer - if you are not trading and just occasionally sell unwanted items online - there is no tax due. As has always been the case, some people who are trading through websites or selling services online may need to be paying tax and registering for Self-Assessment.'
So, whilst it's worth looking again at the criteria above that may mean you're in need of registering, it sounds as though, as for many people around the country, you don't need to be concerned or change your habits in this regard.
Q: I have recently started a business which offers consultancy for building and engineering. I'm running the business side for my new partner, who is the building consultant. So, I'm not the expert in the field and I'm trying to get a fuller understanding of our potential obligations with regard to the Construction Industry Scheme (CIS) and the need for registration. Can you provide any guidance?
A: For most people in the building and construction industry, the CIS is a key piece of regulation that is very important to understand and comply with. It is mandatory for constructors to register for the CIS. However, there are a number of exceptions, depending on certain roles and types of function.
The work of certain professionals may be excluded, meaning they do not have to be registered for the scheme. However, this is the case 'only if they are acting purely as consultants', according to the HMRC guidelines, which adds: 'Typically, this would include the production of designs, plans, technical assessments and reports relating to construction projects including site testing.'
Furthermore, under 'operations excluded', HMRC lists 'professional work of architects, surveyors or consultants in building, engineering, decoration (interior or exterior) or landscaping.'
Looking at these guidelines, it would appear your new venture would fall outside of the requirements of the CIS and you and your partner would not need to register. However, it is wise to be cautious because the guidelines also state the following: 'Any work that goes beyond a consultative or advisory role and becomes the supervision of labour or the co-ordination of construction work using that labour is not excluded from the scheme.'
So, if your partner feels their work is broader, at any time or to any extent, than simply consultancy, it's certainly worth seeking more detailed advice.
Please give our team a call if you'd like to explore the regulations and compliance more deeply.
And for anyone else in a similar position, it's worth noting that there are a few other examples of exceptions in the CIS where you do not have to register if you only do certain jobs. These include:
- architecture and surveying
- scaffolding hire (with no labour)
- making materials used in construction including plant and machinery
- delivering materials
- carpet fitting
- work on construction sites that's clearly not construction - for example, running a canteen
Q: I'm in the process of starting a new business and want to ensure I'm fully prepared for upcoming compliance changes. I'm aware requirements for reporting benefits in kind (BiKs) are changing, but how will it affect small businesses like mine? Specifically, do I need to report loans or accommodation benefits immediately?
A: There was some news around this topic at the beginning of 2024, with the Government releasing proposals to make it compulsory to do this type of reporting by using software.
The announcement at that time stated employers will be required to report and pay Income Tax and Class 1A NICs on most BiKs in real-time on the 'Full Payment Submission'.
However, don't fret; it's not immediate. The intention was to begin in April 2026, giving everyone some breathing space. But an update from the new Government means that it now looks like there should be a further cushion before compliance becomes strictly enforced. The mandatory use of payroll software will now be phased in from April 2026.
And, pertinent to your question on loans, you won't have to payroll loans and accommodation at that stage.
For those who want to on a voluntary basis, you'll be able to report employment-related loans and accommodation through payroll software from April 2026.
As to when payrolling loans becomes mandatory, HMRC had this to say in a December bulletin: 'no decision has been made as to when we will mandate the reporting of loans and accommodation through payroll software - careful consideration will be given to make sure sufficient notice of any change will be provided.'
In the meantime, if employers do not wish to payroll these, there will be a modified P11D and P11D(b) available.
There is likely to be further news in the new year, with officials promising information on plans to publish draft legislation and technical specifications.