People who earn income from ‘side hustles’ will be taxed beginning January 2024. The UK signed up to the Organisation for Economic Cooperation and Development’s (OECD) regulations on data sharing, joining 27 other countries and jurisdictions in a global effort to prevent tax fraudulence and evasion. The cause is currently budgeted at approximately £37m.
With the new data-sharing rules, digital platforms based overseas, such as Amazon, Airbnb, Deliveroo, and Etsy are now required to share their users’ information, even bank account details. Previously, this was only possible with UK companies, but as many sellers using overseas platforms can slip through HMRC’s grasp, the new data-sharing rules are expected to stringently clamp down on deliberate tax dodgers.
Participating countries where the sellers are deemed residents will also be forwarded with the information, which the sellers will have a copy of as a basis of their tax obligations. Everyone from online marketplace sellers, delivery drivers, and holiday rental hosts, to freelancers will have to reevaluate their tax position and act as necessary.
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Those who earn less than the trading allowance of £1,000 will not need to complete their self-assessment returns. If their 2022/23 income exceeds that amount, they will have to register and/or file tax returns before 31 January 2024. Late filing will mean a £100 penalty, increasing by £10 per day if left unpaid for three months.
Some who earn ‘side hustle’ income but do not intend to make profits, such that they are simply decluttering their attic, may not need to file tax returns. There can be several grey areas in the scope of this new tax measure. Those who think they are obliged should contact the HMRC helpline or tax experts. Everyone is encouraged to settle their tax affairs promptly to avoid any fines.
For this matter, contact Legend Financial today, and we will help you promptly and efficiently complete your tax obligations. Subscribe to our newsletter for weekly UK tax updates!
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Reference:
HMRC is clamping down on ‘side hustles’ – what tax do you need to pay? (21 October 2023). Retrieved from Which: https://www.which.co.uk/news/article/hmrc-is-clamping-down-on-side-hustles-what-tax-do-you-need-to-pay-aIykn5m0v5Jj
HMRC side hustle tax clampdown. (6 November 2023). Retrieved from Tax Rebate Services: https://www.taxrebateservices.co.uk/hmrc-side-hustle-tax-clampdown
knowledge/articles/hmrc-tax-changes-for-side hustles/#:~:text=1%20January%202024%
20tax%20reporting, on%20to%20the%20tax%20authorities.
HMRC rolls out ‘side hustle tax’ for online sellers on eBay, Vinted and more. (7 January 2024). Retrieved from Independent: https://www.independent.co.uk/life-style/hmrc-tax-side-hustle-online-sellers-ebay-b2474542.html
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