The rise of the gig economy has led to a surge in individuals using online platforms to sell goods, rent out properties, or offer services. While these activities can provide a much-needed source of income, the government is now cracking down on unreported earnings. The new regulations came into effect on the 1st of January 2024.
"They require online platforms to collect and share transaction details with HMRC!"
This means that any income generated through platforms such as Vinted, Airbnb, and eBay will now be under the scrutiny of the tax authorities. This move is part of the UK's commitment to the Organisation for Economic Cooperation and Development (OECD) to ensure fair taxation and combat tax evasion.
So, what does this mean for side hustlers? If you have been making money through online platforms, you will need to declare this additional income to HMRC. Failure to do so could result in penalties and interest charges, not to mention the potential legal consequences of tax evasion. It is important to note that this applies to all side hustle activities, regardless of the amount earned.
To ensure compliance with the new regulations, online platforms are required to provide HMRC with details of transactions made by UK-based users. This information will include the amount earned, the date of the transaction, and the user's personal information. HMRC will then cross-reference this data with individuals' tax records to identify any discrepancies.
"For those who have been declaring their side hustle income, there is no need to worry!"
However, for those who have not been reporting their earnings, it is time to start thinking about how to rectify the situation. The first step would be to register for self-assessment with HMRC and declare any unreported income. This may result in additional tax liabilities, but it is better to come clean and avoid potential penalties and legal consequences.
It is also worth noting that the new regulations apply to all online platforms, not just the ones mentioned above. This means that if you are making money through any other online platform, you will need to declare this income to HMRC.
The tax authorities have also stated that they will be using advanced data analytics to identify individuals who are not complying with the new regulations, so it is not worth trying to hide your side hustle income!
While the new regulations may come as a surprise to some, it is important to remember that the government's aim is to ensure fair taxation for all. The gig economy has provided opportunities for individuals to generate additional income, but it is essential to remember that this income is still subject to taxation. By declaring your side hustle income, you are contributing to the country's economy and helping to fund vital public services.
"Side hustlers must be prepared to face tighter tax regulations this year!"
With online platforms now required to share transaction details with HMRC, it is crucial for individuals to declare their additional income and comply with the new regulations. Failure to do so could result in penalties and legal consequences.
So, if you have been making money through side hustle activities, it is time to start thinking about your tax obligations and ensure you are on the right side of the law.
Until next time ...
ROGER EDDOWES Business Godparent
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If anything I've written in this blog post resonates with you and you'd like to discover more about paying tax on your side hustle, it may be a great idea to call me on 01908 774320 and let's see how I can help you.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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