There has been recent media interest in the HM Revenue and Customs (HMRC) “side hustle tax.”
This tax targets Britons who sell second-hand goods online or let out their spare rooms and entrepreneurs whose total sales from any side hustle or hobby equate to over £1000 in any tax year will need to register with HMRC to file a self assessment tax return.
This is not a new development but the new mandates require marketplaces such as eBay, Airbnb, Vinted and Etsy to report what their users earn to HMRC. The new measures aim to target people who evade taxes by failing to declare their income to the authorities.
It can be a confusing time for small businesses and sole traders and to support them, UK CEO of leading small business insurer Simply Business, Alan Thomas, has provided clarity on how side hustlers can stay on top of the ‘side hustle tax’.
Alan Thomas, UK CEO of Simply Business, said, “Small businesses are the lifeblood of our local communities, and with over five million of them in the UK, together they contribute trillions of pounds to the economy.
“Our research revealed that around half of the UK’s small businesses began as side hustles – which is why having clarity on taxes is essential to businesses at all stages.
“The online conversation around a ‘side hustle tax’ has left many confused, but it is worth noting that many self-employed individuals will not have to change how they file their tax returns.
“The changes simply mean that HMRC are receiving more information from online platforms than they did before. If you are following existing rules as required, then there is probably no need to worry.
“If you’re unsure whether you should be paying tax, or how much, you can find helpful information about the Trading Allowance online.”