Sharing economy grows to £8bn

HMRC has published a report, Research on the sharing economy, in which the extent and size of this growing sector have been examined, together with the knowledge and attitude of its participants to tax.

The challenge with any report on aspects of the sharing economy, is the absence of a standard definition. For the purposes of this research, the term refers to ‘economic activity facilitated by the internet, through digital platforms and applications, that enables people or businesses to share, sell, or rent property, resources, time, or skills. A function of the Sharing Economy is that it brings together or ‘matches’ suppliers to customers through a common platform.’

Key findings from the research estimate

  • 11% of the working age population (5.3 million individuals) in Great Britain participate in the Sharing Economy as providers
  • Individuals engaging in the Sharing Economy are predominantly young and living in urban areas, with the majority (73 per cent) earning a gross personal annual income of less than £40,000
  • The estimated total gross income generated by providers in Sharing Economy in GB is now £8 billion annually
  • The most common types of Sharing Economy activity that providers were involved in, were buying items to resell (44%), selling crafts (22%) and renting out space (19%)
  • 45% earned less than £250 a year from their Sharing Economy activities
  • Over half (54%) did not see their sharing economy income as liable for tax.

Interestingly, at the time of the research (December 2016), the new £1,000 trading allowance announced at Budget 2016, and enacted in s17, Finance (No 2) Act 2017, didn’t apply. However, from April 2017, small amounts of income such as from reselling on eBay, will now be exempt automatically by the relief. Where previously the sellers would have had to rely on case law to argue that the Badges of Trade did not apply to their activity, so they weren’t trading, now exemption will be automatic for income below £1,000.

Recognising the huge potential that lies in the Sharing Economy, the government’s ambition has been for sector to thrive in the UK. Following a recent study for the European Commission, PWC has reported that

‘sharing economy activity across Europe has accelerated over the past two years, with its five key sectors generating revenues of €3.6bn and facilitating €28bn of transactions in 2015. The UK has emerged as a hub for the sharing economy within the region and contributed to around a third of this activity in 2015. The UK’s sharing economy has grown the fastest in Europe, with transactions almost doubling to £7.4bn in 2015, and platforms taking home £850m of this total. It’s also become the home to a number of sharing economy success stories who are rapidly expanding outside UK shores, such as Lovehomeswap, Justpark and Hassle.’

Will the Chancellor seek to build on this further in Autumn Budget 2017?

Anonymous