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Newsletter issue – February 2024
You may have seen one of the early 2024 tax stories popping up in many of the national newspapers relates to a so-called 'side hustle tax'. Is it really a tax? No. Yet we're seeing it reported as a 'New Year tax clampdown' and similar such descriptions. Unfortunately, it has led to concern, particularly on social media where some people have perhaps misunderstood or misinterpreted what's happening.
At the centre of this is new data-sharing rules coming into force this month that will affect holiday homeowners, delivery drivers, and people who sell second hand items on websites like eBay. Big name online businesses such as Vinted, Airbnb, and Depop are now obliged to collect and share details of transactions with the tax authorities, as of 1 January.
Previously, HMRC had the ability to request the information from UK-based digital platforms. But the UK has signed up to new global rules, which are aimed at cutting down attempts to avoid paying tax.
So, online operators will have to, as routine, report sellers' income that is coming via their websites. That might be handmade items, services or second-hand goods - clothes or toys, for example. It could also include short-term lets for holidays (think Air BnB rentals). If you make tips/gratuities or incentives through online platforms you also could be impacted by the new rules.
There is a threshold. So, anyone earning less than £1,000 need not worry. But if you reach that figure, you'll have to register as self-employed and file a Self-Assessment Tax Return at the end of the financial year. A useful place to get further clarity and for more information is HMRC's online fact sheet. Find that here.
