The Side-Hustle Tax

What is the “side-hustle tax” and do I need to be worried about it?

From 1 January 2024, online marketplace sites like eBay, Uber, Vinted, Airbnb and others are required to report their sellers’ sales details to HMRC. HMRC has always been able to request this data, but from New Year’s Day 2024, income details will be sent automatically by the platforms.

Is this a new tax?

The short answer is no. Anyone earning over £1,000 from trading has always been required to register for self-assessment and send a tax return to HMRC, paying tax on their profits.

The £1,000 threshold is known as the trading allowance. People whose turnover is less than this allowance are not required to register for self-assessment and do not need to send a tax return to HMRC. 

Does this mean I can’t sell second-hand items without paying tax?

Again, no. Generally, second-hand items sold on eBay or Vinted are sold for less than they were purchased, meaning that the seller makes a loss on sale, which isn’t generally taxable.

Not everyone who sells on eBay or Vinted is a “trader”, for example, meaning someone who sells items regularly to make a profit or lets out a holiday apartment. The rules for determining trading status are complex and take into account a number of factors. Generally, someone having a clear-out and selling old items will not be classed as trading, even if they earn over £1,000 in a year from the sales.

Who is affected by this change?

The purpose of this change, according to HMRC, is to crack down on businesses using private eBay or similar accounts to run their business, making a profit and not declaring this to the tax authority. This will also affect short-term letting hosts who rent out properties on AirBNB and who did not previously declare their rental income.

What do I need to do?

If you think you have income that should be declared, get in touch with us today. We can advise you on how to proceed, and help you to register for self-assessment. We can work with you to prepare any historic returns and ensure that HMRC penalties are minimised where possible.

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