HMRC is targeting Brits that are earning extra money on the side to make sure they are paying tax on their income.
HMRC is currently writing to individuals who may have tax to pay on online marketplace sales made in earlier tax years, according to the Institute of Chartered Accountants in England and Wales (ICAEW).
Anyone generating more than £1,000 from their side hustle may need to complete a Self Assessment tax return and should check their tax obligations using HMRC's guide , published as part of the latest Help for Hustles campaign.
The UK tax body reports that around one in ten Brits are operating in what it calls the "hidden economy", with 65% of these individuals "most likely operating side hustles and largely unaware that they should be registered for tax". Unpaid tax from the hidden economy accounted for about £2.2 billion in the 2022/23 tax year according to HMRC.
"Nobody wants an unexpected tax bill, so anyone with a side hustle should check HMRC's straightforward guide and make sure they're getting their tax right." Angela MacDonald, HMRC deputy chief executive officer.
The HMRC guide covers five key areas to help people understand their tax obligations:
- people buying or making things to sell
- anyone that works for themselves doing multiple jobs
- content creators or influencers
- people that rent out their property
- people with a side gig
The government is urging people that trade or sell services to check if they need to tell HMRC about additional income on the government website. However, if someone is clearing out their unwanted items and putting them up for sale, they will not need to pay tax.
HMRC targets online traders
The ICAEW reports that HMRC is now writing to individuals who may have tax to pay on online sales made in 2022/23 and in earlier tax years.
The HMRC letter explains that an individual who buys or makes goods to sell at a profit is likely to be trading. Income tax may be payable on any profits from the trade depending on the circumstances. HMRC also says that capital gains tax (CGT) may be due on the sale of personal items depending on the nature of the items and how much they were sold for.
However, no tax will be due where total sales are less than the £1,000 trading allowance or where the person's total taxable income is within their personal allowance for the year.
The ICAEW says that where the person has income to declare, they should follow the instructions on GOV.UK or call HMRC. If they don't have income to declare, they should contact HMRC by phone or email. In both cases, HMRC says they should take action within 30 days of the date of the letter or HMRC will open a compliance check.
Written by Rachel Miller.
