UK News

HMRC CRACKS DOWN ON "SIDE HUSTLES" UNDER NEW YEAR TAX RULES

HMRC CRACKS DOWN ON "SIDE HUSTLES" UNDER NEW YEAR TAX RULES
UK News

HMRC CRACKS DOWN ON "SIDE HUSTLES" UNDER NEW YEAR TAX RULES

HMRC CRACKS DOWN ON "SIDE HUSTLES" UNDER NEW YEAR TAX RULES

HMRC has decided to crack down on “side hustles” this year by forcing people who sell second-hand clothes online or homeowners renting out a spare room on Airbnb to pay tax on their earnings under a New Year tax clampdown.

From 1 January, firms including Vinted, Airbnb, Depop and eBay are required to collect and share details of transactions with the tax authorities.

While HMRC was already able to request information from UK-based online operators, from the start of 2024 there are new rules that the UK has signed up to via the international body, the Organisation for Economic Cooperation and Development (OECD), as part of a global effort to clamp down on tax dodgers.

Under the new rules, digital platforms will routinely report the income sellers are obtaining through their site.

The rules will apply to sales of goods, such as second-hand clothes or handmade items, which have become a popular way for Brits to make some extra cash in recent years, particularly as a result of the gruelling cost of living crisis.

Services such as taxi hire, food delivery and short-term accommodation lets will also be included in the new crackdown.

The threshold for earnings from online side hustles is set at more than £1,000 a year. If earning above this, online sellers must register as self-employed and file a self-assessment tax return at the end of the financial year.

HMRC said in a statement: "These new rules will support our work to help online sellers get their tax right first time. They will also help us detect any deliberate non-compliance, ensuring a level playing field for all taxpayers."

HMRC also advised that those earning below £1,000 should keep records of the sale in case they are asked for them.

Adam Jay, chief executive of the second-hand marketplace platform Vinted, has stated that the new rules would not affect many of the site’s sellers.

"It’s actually quite a small proportion of users of our platform who will trigger this threshold where we need to provide information," he said.

"It’s only those people who are making a profit from selling second hand items that might be eligible for tax and then it’s about their own personal tax situation what tax would ultimately be due to HMRC," he said.

"We’ll be actively reaching out to those sellers explaining what the new requirements are why they exist."

However, social media users have been criticising the decision, branding it an “unfair” rule considering that many Depop and Vinted sellers on low incomes rely on using the digital platforms to make extra cash.

One Twitter/X user wrote: “The folk I know who use Depop are all students selling second-hand clothes they got from charity shops trying to get enough money to eat. Ludicrous”

“Tax the billionaires and not the people unable to survive just on their salary alone and who are being forced to sell their belongings to scrape together some extra cash during a cost of living crisis,” another added.

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