Published: 02/11/2023 By Dean ClarkWith many presently feeling the effects of the current cost of living crisis, some are now turning to alternative ways to generate additional income, referring to this as their “Side Hustle”.
A side hustle is classed as additional employment outside of your primary job in order to provide extra income. You only have to go onto social media to be bombarded with ideas and stories of people who have turned their side hustle into a their new 9-5, the promises are endless!
But all the glamour aside, what does it mean financially to have a side hustle?
HMRC has issued a tax warning to anyone who may be earning extra cash in the form of a side hustle from popular online platforms, such as Airbnb, eBay, Etsy, Uber, Deliveroo etc, who may not be accurately returning details of this income. In agreement with these companies, HMRC has recently instructed these, and other popular platforms to record how much money people are making through them, and to report it to the tax office accordingly. From January 2024, HMRC will be increasing its efforts to identify people with ‘side hustles’ and to collect taxes due on these earnings.
The move is held as being part of a wider crackdown on tax avoidance, from people boosting their income. If a person makes more than £1,000 in a tax year, (alongside their regular job) they are expected to register as self-employed, and to report this income to HMRC, and to pay the correct amount of tax on this income.
HMRC simply does not trust the increasing number of people earning extra income in this way, to accurately report how much money is being received. By going directly to these platforms, and with serious investment being directed towards this new initiative, (e.g additional full-time staff employed to enforce these new measures), HMRC believe they will soon be able to identify discrepancies between the information provided by a digital platform, and the individual, giving them grounds to launch an investigation, citing potential tax evasion.
This should not directly affect those already declaring the extra income but is designed to impact people who are not doing this or are under-reporting their earnings.
If you do know anyone who may be affected by the above, or, if you are not sure if this may be relevant to your own tax position, please feel free to pass on our contact details, or give us a call. We would be happy to discuss matters on a strictly confidential basis, and to assist people with their tax responsibilities.