Do I need to worry about the new ‘side hustle’ tax rules?

What are the new ‘side hustle’ tax rules?

On the 1st of January 2024, HMRC put new rules into place that will affect digital platforms, such as eBay, Etsy, Vinted, Deliveroo and Uber.

The new rules are specifically aimed at these online platforms as opposed to any individuals and have not resulted in any new tax obligations.

From now on, these sites will have to:

• start collecting information about people who make money through their platforms.
• send this information to both HMRC and the individual themselves on or before the following 31st January (for example, Jan 2025 for the period 1st Jan 2024 to 31st December 2024).

This will result in HMRC being able to identify the people who are earning money through these platforms and to make sure they are paying tax if they should be.

These online platforms won’t automatically collect and send your data if you’re selling less than 30 items a year, or you have total earnings of under £1,700 from these sales.

Do I need to worry about the new ‘side hustle’ tax rules?

This all depends on your situation.

If for example, you were selling clothes that you no longer wanted, then this is unlikely to count as trading or miscellaneous income, which means you won’t need to pay tax on it.

This is because it’s doubtful you’d be selling regularly with the intent of making a profit on these items; it’s more likely that you’re charging less than you paid for them and just trying to get back some of the money you’ve originally spent.

If, however, you were buying items in order to resell for a profit, or making your own products to sell, then this is likely to count as trading.

Also, if you have a trading or miscellaneous income under £1,000 (before expenses are deducted) then this won’t count as earnings that need to be reported.

You might need to worry if you are earning over this figure and you haven’t declared it to HMRC because the information now being shared by the online platforms will make it apparent that you should have been paying tax on your earnings.

It’s also worth noting that HMRC will be able to exchange this data with other tax authorities in other countries that have signed up to the new rules.

We hope you found this page helpful. Our team of experts are available to answer any questions you may have, so drop us a line on 01206 591 000 or email Jaime at jaime.thorpe@contractorumbrella.com.