Hundreds and thousands of families who earn extra income online face a shock of tax bills and fines unless they declare the income by the January 31 deadline.
Homeowners who rent rooms on sites such as AirBnB, or ‘mumpreneurs’ selling homemade goods, are unaware they must pay tax on their earning.
‘The taxman needs to take a common-sense approach and understand that many people who have recently signed up to these websites might have not realised that they need to pay tax or may have been confused by the rules’ said Director of advice firm Candid Financial, Justin Modray.
Most people taking part in ‘sharing economy’ are liable for tax on any cash they generate, in the same way they pay income tax on their wages.
HMRC have said it is actively pursuing those who fail to declare these earnings by the end of January, hoping the crackdown will raise millions of pounds in extra revenue.
Last night (Sunday 8th January), an HMRC spokesman said: ‘The majority of traders in the sharing economy are already declaring and paying their tax just like other taxpayers,’
He went on to add: ‘The wealthiest 1 per cent pay more than quarter of all income tax with HMRC ensuring everyone pays their fair share. When we have evidence of tax going unpaid we take steps to put that right and that applies right across the economy.’