The UK Rules
'Follow the Regulations'
Sharing Economy

Selling Services Online Tax Rules

You may need to pay tax on income gained from selling services online. That is because the 'sharing economy' or a hobby business you have, might be taxable.

HOBBY BUSINESS TAX RULES: Use this guide to check whether you need to pay tax and how to pay it if you do.

Income tax may be due if you are using websites and apps to sell types of services such as:

As a rule this type of 'sharing economy' or 'peer to peer' will not be your main job or full-time business. But, 'hidden entrepreneurs' selling services online like these may be liable for tax.

When You Need to Pay Tax

Generally, Income Tax is due on any profit you make from selling services on websites or apps. But, not if your total taxable income (including profits) is less than your Personal Allowance and any tax reliefs that you qualify for.

Note: Deduct allowable expenses used to provide your service from your taxable income.

When You Do Not Need to Pay Tax

As a rule, Income Tax is not due on occasional money earned from selling personal possessions online. The same applies to anything you do to cover your costs, such as carpooling.

But, in some cases you may be liable for paying Capital Gains Tax.

How to Pay Your Income Tax

Do your calculations to check if you need to pay Income Tax. If you determine that you owe tax, you can fill out a Self Assessment tax return.

Another option is to contact HMRC to declare all your income. This declaration must include anything you earned from selling services through online networks.

Note: Contact the Income Tax helpline if you need to confirm about paying Income Tax on any of your earnings.

Tax Relief: Rent a Room Scheme

Some people rent out furnished rooms of your home for non-business use. In these cases you may be eligible to claim tax relief through the Rent a Room scheme.

Trading Allowance for Online Business

The government introduced a new 'trading allowance' for some individuals. It means people can operate a small online business without the need to register or pay tax. HMRC announced:

There is rapid growth in the digital and sharing economy. This means it is becoming easier for more people to become 'micro-entrepreneurs'. But, for some, the current tax rules can seem daunting or complex.

Individuals running small size online businesses qualify for a £1,000 trading allowance. The government said this new allowance should take full effect from April 2017.

Income Gained from Selling Services Online