This is the latest “come clean” campaign by HMRC aimed at those who have second incomes but haven’t got round to declaring them on their tax returns yet for whatever reason.
The sort of thing they mean by Second Incomes is money earned “on the side” which has not already been taxed as earnings or trading profits. Examples include cash earned from:
- Public speaking
- Training or mentoring
- Writing articles or short stories
- Supplying photographs or illustrations
- Organising parties or excursions
- Providing entertainment
- Taxi driving
- Fitness training
- Gardening or decorating
- Cleaning and ironing
- Baby sitting
- House sitting
- Dog walking
- Car repairs/cleaning
- Odd jobs for other people
- Creating and selling craft items
- Internet trading on a regular basis
- Selling goods at market stalls, car boot sales, etc
It is not meant to include selling old items you no longer want or house/garage clearances. Those are just one-off activities, not regular trading. In those circumstances, you are merely making a capital gain, not a trading profit, and most old possessions are exempt from capital gains tax (except for items worth more than £6,000 such as paintings and antiques).
Only when this kind of activity turns into a business and you start buying or making goods to sell in an organised way does it become trading. Then you should register as self-employed and declare it on your tax return.
It also does not include rent from letting property. You need to disclose this separately under the Let Property Campaign. Please see our Fact Sheet for further details.
The Second Incomes Campaign gives you a chance to declare money received from such activities in return for a lower penalty, or even no penalty at all. However, you would be expected to declare such income on a tax return in future.
If you do not disclose such income, either on a tax return or through this campaign, and HMRC catch up with you later, the penalties could be up to 100% of the unpaid tax, plus interest. With the Second Income Campaign, penalties are a maximum of 20% but could be only 10% or even zero. There will be interest to pay too but this is only 3% at present.
Please come and speak to us if you wish to take part in this campaign. We will make the disclosure for you, calculate the amount to be disclosed, work out penalties and interest and make a formal offer to HMRC on your behalf. All for a very reasonable fee.
Call us on the numbers below or send us an email for further details.