New HMRC rules set “hustlers” in their sights

HM Revenue & Customs (HMRC) has recently been granted new powers by the Government, aimed specifically at addressing unpaid taxes from e-traders and side hustlers.

This move places greater scrutiny on individuals selling items on platforms like eBay, Vinted, or Depop.

These sellers must now be more vigilant about their sales and the income generated from them, as these platforms are required to monitor and report seller earnings from 1 January 2024. Non-compliance by platform operators could result in substantial fines.

Online selling, a common method for earning additional income, affects a large number of people who could find themselves impacted by these new regulations, especially if their earnings exceed certain thresholds.

The £1,000 tax-free allowance

There’s a £1,000 tax-free allowance for UK residents who have a primary job but also earn additional income from casual or irregular sources.

This might include activities like freelance writing, crafting, pet or house-sitting, or tutoring.

Many individuals, especially when starting such activities, may not consider the tax implications of these earnings, as they often fall under the tax-free threshold.

However, once your additional income exceeds £1,000, it’s necessary to register as self-employed and file a Self-Assessment tax return. This process is required to report your additional income and work out your tax dues.

Completing a Self-Assessment tax return

Self-Assessment is HMRC’s method for collecting income tax from individuals not covered by the PAYE (Pay-As-You-Earn) system.

Tax returns must be submitted by the end of the tax year (5 April) to which they apply, and the tax due must be paid by 31 January of the following calendar year.

Missing the deadline for submitting a return can result in a minimum fine of £100, increasing for delays beyond three months.

Implications of the new rules

For many, these changes won’t affect their earnings if they remain below the £1,000 threshold.

Those regularly exceeding this amount are likely already familiar with and compliant with Self-Assessment requirements.

However, it’s the middle bracket of earners, those close to the threshold, who need to be particularly mindful of their earnings.

A common oversight is not recognising that sales on e-trading sites count as taxable income.

With HMRC now automatically informed of such earnings, failing to report them could lead to accusations of unpaid taxes.

Therefore, it’s crucial for all e-traders and ‘side hustlers’ to meticulously record their sales and earnings to understand their tax obligations.

For further information or clarification on these tax rules, please contact our expert team for guidance.

Loading Quotes...

Latest News

10
Jun
Four great reasons to file your tax return early

We often find that clients begin to show signs of stress when the Self-Assessment …
Read more…


10
Jun
New advisory fuel rates for electric company cars

HM Revenue & Customs (HMRC) has recently announced new Advisory Fuel Rates …
Read more…


Don’t pay more tax
than you need to

Register for our newswire

Our regular Newswire mailings are designed to keep you up to date with the latest industry news and events.

Register here

Client Login
Complete our Client
Satisfaction Survey

Spring Budget 2024

The latest Budget was an important speech for the Chancellor, Jeremy Hunt...

Read full our summary