Internet businessmen and tax
Revenue and Customs (HMRC) will send 4,300 notices to internet earners in the kingdom whom it suspects of not paying taxes. This was reported by the Financial Times.
The authority said such letters will be sent to people it believes "may have owed tax", but did not agree to the underpaid fees. For example, HMRC will send 2,300 notices to bloggers who earn income for posting content on platforms such as TikTok, YouTube and Instagram, and another 2,000 letters to those who engage in online trading on marketplaces like eBay and Etsy.
Failure to pay taxes on income earned on the Internet is linked to low awareness among young people, the paper said.
According to one business trainer, young people forget that content creators living in the UK must pay tax on profits regardless of where they are made.
Money earned from online platforms is subject to income tax and must be declared on your self-assessment tax return, unless you decide to set up a company when you are liable for corporation tax.
People who make a profit from their online activities will be treated by HMRC as traders and need to register with the tax authority and complete a self-assessment tax return if their gross income exceeds £1,000.
Even if you are not engaging in social media activities for the specific purpose of making a profit, if your gross income from those activities (plus any other trading and other income, not just online income) is more than £1,000 a year, HMRC says you still need to report it.
According to tax advisers, recipients of HMRC's letter of recommendation should not ignore them.
According to research by US software developer Adobe, the number of content creators in the UK has doubled between 2020 and 2022 to around 16 million, with almost 2.8 million of them earning an average of £120 an hour.