This isn't some scary new tax designed by HMRC to punish people. In fact, it's not even a new tax.
So what do people mean by "Side Hustle Tax"?
The term was most likely created for catchy headlines by the media (ironic that we've now used it here!).
A side hustle is effectively a piece of work that somebody gets paid to do outside of their main job. They are "jobs" that people do "on the side". Most of the time these jobs are done on a cash basis or via online platforms.
What are the tax rules on side hustles?
There is no "side hustle tax rule".
But there are rules that mean if you earn over £1,000 in trading income, outside of your regular employment, then you have additional tax obligations to consider. But again, this is not a new rule.
Why is there more awareness of this now?
The world is changing, fast. HMRC are slowly catching up.
Everyone knows that if you receive cash for selling your products and/or services, you should declare it to HMRC, that's not new news, right?
Well this is the same concept. If you earn more than £1,000 in additional income in a tax year, then you probably (advise should be taken) declare it to HMRC.
The reason this has become "news" recently is due to new rules which took effect from 1 January 2024. In short, UK-based online platforms must collect information about people who make money through their platforms and on or before the following 31 January, they must send this to both HMRC and the individuals.
Meaning Ebay (or other platform) will send you , and crucially HMRC, a statement of the money you earnt on their site each year. Thus making it much harder for anybody to accidentally (or deliberately) hide their earnings from HMRC.
Do you have to pay tax on your side hustle?
Do you earn over £1,000* per tax year on it? If so, then possibly. If you earn less than this from all your side hustles combined, then you need not worry.
If however you earn more than this on your combined side hustle income, then it is likely you have additional tax obligations to comply with.
If you are not sure whether you are caught or not, we would be happy to help you assess your position.
* There are exceptions to this rule which should be considered on an individual basis. But it is not likely that you will have tax to pay if by some miracle you make more than £1,000 per tax year selling your old clothes.
