Small online sellers set to lose key £1k tax break

Microbusinesses selling items on platforms like eBay and Amazon Marketplace are set to lose a key tax relief.

The government has quietly announced the scrapping of a relief that meant those who supplement their income by selling online would not have to pay tax if their earnings were below £1,000.

Tax relief stripped from the Finance Bill

The relief was announced in 2016, but has been stripped from the Finance Bill. It was set to be introduced on 6 April with the new tax year, but will now not be put in place.

Instead, so-called ‘micro-entrepreneurs’ will be required to declare their earnings to the tax man regardless of how small they are.

Speaking to the Mail, a government spokesperson said: “We can’t speculate on what will happen in the future, though I can confirm that the measures have been dropped from the Bill.”

This is despite cross-party support for the measures, which were advertised as a means by which the burden of tax law could be minimised for the smallest UK businesses.

Individuals who rent out rooms on sites like Airbnb will also lose a similar £1,000 tax relief.

Sellers in crosshairs

The news follows reports of a potential HRMC crackdown on small online sellers. Last month we reported that the taxman has massively increased its data collection capabilities, and now has centres across the UK dedicated to spying on those who sell online.

Users of online marketplaces have been warned that they cannot continue to trade without declaring their income. It is estimated that nearly 900,000 online sellers failed to complete a tax return last year.

Host of u-turns

The reliefs are part of a host of measures announced in 2016 that have now been removed from the Finance Bill in order to ensure that it is passed in time for the snap election.

Other measures stripped from the Bill include a reduction in the divided tax allowance, and elements of the government’s controversial Making Tax Digital scheme.

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