HMRC has launched a new summer campaign reminding people with “side hustles” that additional income may need to be reported for tax purposes.
The campaign specifically highlights people earning money from activities such as wedding services, online selling, content creation, freelancing and similar work.
The key figure to remember is the £1,000 trading allowance.
If your total income from side activities exceeds £1,000 during the tax year, you may need to register for Self Assessment and declare that income to HMRC.
This is becoming increasingly important because HMRC receives growing amounts of information from digital platforms. Information supplied by marketplaces and gig economy platforms can be compared with tax returns, making it easier for HMRC to identify potentially undeclared income.
However, selling something online does not automatically mean you have a tax liability.
Selling unwanted personal possessions will generally not be taxable. On the other hand, regularly buying or making goods with the intention of selling them, or providing services in return for payment, is more likely to be treated as trading.
Have a side hustle? Check these four things
If you earn additional income outside your main employment or business, you should:
- Review all of your additional income streams.
- Check whether your total trading income exceeds £1,000.
- Register for Self Assessment if required.
- Keep proper records from the outset rather than trying to reconstruct them later.
Dealing with an issue early is almost always easier and less costly than responding to an HMRC enquiry later.
Need advice? Progress Accountants is here to help
Whether you’re concerned about potential tax changes, preparing your business for new digital requirements, unsure about your side-hustle income or simply want to review your current tax position, our team is here to help.
Speak to us before making significant financial or tax decisions so we can help you understand your options and plan with confidence.
