The UK government, through HM Revenue and Customs (HMRC), is implementing stricter rules and regulations to ensure that individuals earning income from side hustles properly report and pay taxes on their additional earnings. This move is aimed at cracking down on tax avoidance and ensuring that people accurately report their self-assessment income.
For individuals in the UK who engage in side hustles. Starting from January 1, 2024, HM Revenue and Customs (HMRC) is implementing measures to crack down on tax avoidance by instructing popular side hustle platforms to report the income of their users.
The affected platforms include Airbnb, Fiverr, Uber, Deliveroo, Vinted, Depop, and Etsy. These platforms will be required to record and report the earnings of users who engage in self-employment or earn additional income alongside their regular employment.
HMRC's initiative aims to ensure that individuals accurately report their self-assessment income to the tax office, and the reported data will be used to identify any discrepancies. The government is investing over £39 million in this effort, and a specialized team will be working to detect inconsistencies between income from digital platforms and tax returns.
It's important for individuals to be aware of the requirement to register as self-employed and report income to HMRC if they earn more than £1,000 in addition to their regular job within the tax year. Failure to comply with these rules may lead to investigations by the tax office.
Workers who are already correctly declaring their additional income will not be affected by the new reporting rules. However, those who fail to report their earnings accurately may face tax-related issues.
This development underscores the need for individuals engaged in side hustles to be aware of their tax obligations and to ensure proper reporting to HMRC. The information you provided serves as a reminder for individuals to research and understand the tax implications associated with their side hustles to avoid potential tax issues in the future.
Effective Date: The crackdown is set to begin on January 1, 2024.
Platform Involvement: Popular side hustle platforms such as Airbnb, Fiverr, Uber, Deliveroo, Vinted, Depop, and Etsy have been instructed to record users' earnings and report this information to HMRC.
Reporting Requirements: Individuals who are self-employed or earn additional income alongside their regular employment are required to register as self-employed and report their income to HMRC if it exceeds £1,000 in a tax year.
Consequences of Non-compliance: Failure to properly declare and report earnings could lead to investigations by HMRC. The government is investing over £39 million in a specialized team to identify discrepancies between income from digital platforms and tax returns.
Self-Assessment: Those with side hustles need to file a self-assessment tax return and pay the corresponding tax on their own, as it doesn't automatically come out of their regular pay like PAYE.
Survey Insights: A survey mentioned in the information indicates that almost a third of UK workers engage in side hustles to supplement their income due to the cost of living crisis.
Advice: A reminder for individuals to understand the tax implications of their side hustles and to do thorough research before starting one. It's crucial for individuals engaged in side hustles to stay informed about tax regulations and ensure compliance to avoid potential investigations and penalties.