As sellers making money through online platforms, it’s super important to get a handle on self-assessment for your taxes. Let’s break down why this matters, how to prepare, and the common mistakes to avoid.
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ToggleWhat is self-assessment?
This is how HM Revenue and Customs (HMRC) collects income tax. If you’re earning money from selling goods or services online (and if you’re reading this it’s very likely), you may need to register for self-assessment and file a tax return. This applies whether you’re running a full-time business or just making some extra cash on the side.
Why bother?
Self-assessment keeps you on the right side of the law. HMRC requires you to declare all your income, and not doing so can lead to penalties. So, whether you’re selling handmade crafts, reselling items, or offering services, you need to report that income. If you’re buying items to resell, or making products with the intention of selling them for a profit, that’s taxable. The same goes for services like tutoring, dog walking, or renting out property through online platforms. Basically, if you’re making money, HMRC wants to know about it.
Claim those expenses!
The good news is that you can claim allowable expenses to reduce your taxable income. This might include the cost of materials, shipping fees, or even a portion of your home office expenses if you work from home. Keeping good records of these expenses can save you money when it’s time to file your tax return.
New self-assessment reporting rules from 2025
Starting January 2025, online marketplaces will share sales data with HMRC. This new reporting requirement means that platforms like Amazon, Etsy and eBay will provide HMRC with information about sellers’ transactions to help ensure tax compliance. This means it’s even more important to keep accurate records and ensure you’re meeting your tax obligations. You don’t want to be caught off-guard by these changes.
When is the 2025 tax self-assessment deadline in the UK?
Remember, the deadline for submitting your online self-assessment tax return is midnight on 31 January each year. If you prefer to file a paper return, the deadline is 31 October.
Make sure you pay any tax owed by 31 January to avoid penalties.
Be prepared: 10 do’s and don’ts for self-assessment
- Don’t miss the filing deadline: One of the most common mistakes is missing the self-assessment filing deadline, which can result in penalties – so mark your calendar and set reminders.
- Don’t ignore new reporting rules: Stay informed and ensure your records match what the platforms report. If you’re registered with AVASK, we’ll keep you updated about major changes to be aware of.
- Don’t omit any sources of income: Ensure you include everything from product sales to services.
- Don’t rush the process: Start early to give yourself plenty of time to gather all necessary information and review your return thoroughly.
- Do keep accurate records: Failing to keep accurate records is a big no-no. If you don’t track your sales, expenses, and other financial transactions properly, you’re likely to make errors on your tax return.
- Do declare all your income: this includes sales from all platforms and any other sources. Double-check your figures to ensure accuracy.
- Do claim the correct allowances or reliefs: Make sure you know what expenses you can claim and keep receipts and invoices to back them up.
- Do reconcile accounts regularly: Make it a habit to so you can catch any errors early.
- Do get professional help: AVASK can help you stay compliant with all your tax obligations selling into or from the UK.
- Do correct mistakes: If you realise you’ve made a mistake after submitting your tax return, you can correct it. Log into your HMRC online account, select the tax year you want to amend, and make the necessary changes.
By following these tips and avoiding common mistakes, you’ll be well-prepared for self-assessment and can focus on growing your online business without any tax-related worries hanging over your head. For more detailed advice, read HMRC’s guidance on self-assessment.
Happy selling!
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