The growth of side hustles has found itself under HMRC’s microscope, leading to a more rigorous approach to tax regulations. As more individuals venture into the gig economy, HMRC is ensuring that all earnings are transparently reported.
This is part of HMRC’s goal to ensure full recovery of income and reduce the risk of tax evasion. The new rules will affect those earning more than £1,000 before deducting expenses through gig economy platforms, who will need to declare and pay Income Tax on this amount.
Here’s a breakdown of the new tax regulations and their implications for freelancers in the UK…
What exactly is a side hustle?
Simply put, a side hustle is an additional source of income beyond one’s primary job. This could range from renting out a property on Airbnb, selling crafts on Etsy, to offering professional services on platforms like Fiverr.
What are the changes going to be?
From 1st January 2024, digital platforms facilitating side hustles, including Airbnb, Etsy, Deliveroo, Upwork, Fiverr, and Uber, will be mandated to share user details, including bank account information, with HMRC. This is a significant shift from the current scenario where only some platforms, such as Airbnb, report user income details to HMRC.
How will these new regulations be enforced?
HMRC is investing £39.9 million to crack down on individuals who fail to report their side hustle income accurately. A specialist team of 24 experts will be dedicated to identifying discrepancies between income reported from digital platforms and tax returns. Tax investigations will be launched where necessary.
What does this mean for you?
If you earn more than £1,000 per year from your side hustle, it is crucial that you register for Self-assessment and accurately report your income to avoid hefty penalties and fines. With approximately 7.25 million gig workers in the UK, these new rules are expected to impact a significant number of people.
Stay on the right side of HMRC with Nordens
Staying informed and proactive is key in this evolving tax environment. If navigating these changes seems challenging, Nordens is here to help. With expert advice and tailored solutions, we ensure you’re always on the right side of tax regulations. Contact us today for comprehensive tax guidance tailored to your needs.