We reported last October that HMRC was putting together a task-force to crackdown on people earning money from side hustles. A twenty-four member strong team to chase down the four in ten people who earn undeclared money from side hustles such as eBay, Etsy, Deliveroo etc.
Currently people who earn less than £1,000 from secondary income to their main employment do not have to complete a tax return as they have a small 'trading' tax-free allowance. Money made through renting a room up to £1,000 is also given a tax-free allowance. However, if these limits are exceeded a tax return must be filed to declare the income.
HMRC will use rules that came into force on January 1st 2024 to open investigations using the data they collect. Rules under the OECD (Organisation for Economic Co-operation and Development) now require so-called side hustle platforms such as AirBnb, Vinted, Etsy to share transactional data with the Taxman. Other platforms that allow things like selling clothing, takeaway deliveries, car rental and property rental will also be obliged to follow the rules. The first tranche of data will be collected by the initial reporting deadline January next year (2025).
Companies that do not adhere to the new rules and fail to hand over customer bank details and transaction information will incur fines and penalties. Firms will not be required to share data for people who made less than £1,735 or transaction fewer than 30 times.
We created a side hustle pay calculator to help show how much you can take home from working a 'side hustle' - it will show the effect of taxation taken into account when extra money is made on top of regular employment income. For example, a person earning £25,000 from their main employment who then makes £2,500 from selling items online will pay around £500 in taxes.