How the recent tax overhaul affects your side hustle
4 January 2024
As 2024 begins, a new set of tax regulations for side hustles has been implemented in the UK, significantly affecting individuals who earn income through online marketplaces. These changes are part of a broader effort to modernise the tax system, ensuring that income generated from digital platforms is reported and taxed correctly.
Under these rules, as of 1st January 2024, platforms like eBay, Etsy, and Airbnb are required to report earnings over £1,000 per year per seller to HMRC. This move aims to bring more transparency to the digital economy and aid individuals in understanding and fulfilling their tax obligations accurately.
Impact on online sellers
If you’re an entrepreneur using digital platforms like eBay, Vinted, or Airbnb, these changes are particularly relevant. The first step is understanding whether your activities classify you as a trader for tax purposes. Regular selling with a profit motive typically falls under this category.
Compliance and reporting
The responsibility for reporting this income lies primarily with the digital platform operators. However, as a seller, it’s essential to stay informed about the income data shared with HMRC and to ensure that your tax filings reflect this information accurately.
Strategies for adaptation
- Review Your Earnings – Regularly monitor your online sales to determine if your earnings exceed the £1,000 threshold.
- Understand Your Tax Obligations – Familiarise yourself with how your online income impacts your overall tax liability.
- Stay Informed – Keep abreast of any additional guidance or changes in the regulations that might affect your tax responsibilities.
With these new tax rules now in effect, it is essential for entrepreneurs and anyone with a side hustle to be informed and prepared. This means staying updated on how your online income might affect your tax filings and ensuring you meet all your tax responsibilities.
At Simon & Co, our team is here to assist you with understanding these changes and integrating them into your financial planning. Reach out to us for tailored support and to ensure your side hustle continues to thrive under the new tax regulations.