Tax breaks for so called ‘micro-entrepreneurs’ have been scrapped despite being introduced just a few weeks ago in April. It means that anyone earning money on a regular basis from selling goods online or renting out parts of their property will have to pay tax on what they earn. The government’s U-turn feels a bit like being forced to give back a present simply because the giver has changed their mind – and we all know how disappointing that can be.
Under the previous rules which had been announced in last year’s budget reforms, anyone selling goods via the internet or renting out rooms, garages or driveways, would not have to pay tax on the first £1,000 made. That meant a potential tax break of £2,000 as the £1,000 allowance applied to both trading online and renting property.
The tax allowances were introduced as a way of helping out those entrepreneurial enough to make a bit of cash on the side. But it’s not the only change that’s been made to this particular finance bill. The government has been trigger happy with the delete button, ditching 72 out of 135 clauses that made up the original legislation.
So, how come the longest finance bill in history has been reduced from a yawn inducing 762 pages to a mere 140. Well, speculation is that the government wanted to rush through other, finance changes (mainly boring things to do with income and corporation tax) before parliament shut down in preparation for the June election. As a result, they took out pretty much everything else except for what they really, really wanted (a bit like how you’d negotiate with a four-year old).
The aim isn’t to tax those of us who flog a few unwanted clothes or furniture online but those who essentially run small businesses without declaring what they owe (tut, tut). So, for any money making Del-boys out there who are trading regularly on the internet, it just means that in the meantime, you’ll have to state what you earn.
If it all sounds like too much faff but you still want your money to work hard, then why not invest in a cash ISA or savings account? Ok – it’s not as exciting as wheeler dealing, but it’s better than being chased by the taxman.