HMRC has launched a new tool to help online influencers and side hustlers understand their tax obligations.
HMRC said people may need to report income, gifts or services they have received from selling personal possessions or goods, providing a service, creating online content or renting out land or property. It said this could be an individual’s main source of income or an additional source.
The tool can be found on Gov.uk and has been launched in response to new rules that oblige digital platforms to report data to HMRC about the incomes earned by their users.
The reporting rules for digital platforms came into force in January 2024, with the first reports due to be provided to HMRC by 31 January 2025.
Dawn Register of accountancy firm BDO said: “The rules on the tax you need to pay on income or capital gains haven’t changed. However, there has been a great deal of confusion around when and how people need to pay tax on extra income or gains earned through side hustles such as selling goods online or earning money through social media content.
“This new tool is a useful aid to those who are unsure about whether they will need to file a tax return and how they should declare their earnings and gains.
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“Those who do sell online should be aware of the new rules, which require digital platforms to report transactions data from users. Digital platforms have a deadline of 31 January to report this data to HMRC for the calendar year 2024, meaning this will cover at least part of the 2023-24 tax year. Those needing to file a return for this period will need to do so before 31 January 2025.
“Interestingly, HMRC’s new tool doesn’t appear to ask users about historic[al] income earned in prior years – but if you had such income in the 2023/24 tax year, this may well spark HMRC to ask about earlier tax years. Taxpayers who have not correctly reported their earnings for previous years are advised to bring their historic[al] tax affairs up to date to avert any nasty shocks later down the line when HMRC comes calling.”
Unpaid tax from earlier years may be subject to late payment interest – currently at 7.25% – and penalties, depending on the nature of the reasons for non-compliance.
Source: Do you need to pay tax on your side hustle?
