Side Hustle Tax?

From 1 January new reporting rules for digital platforms require the likes of eBay, Vinted & Airbnb to report information to HM Revenue & Customs (“HMRC”). This information will include details of the income of sellers of goods or services on their platforms.

The seller will receive a copy of the data that has been provided to HMRC.

Lots of media reports have suggested that all income received from selling on these platforms is now taxable & coined the expression “side hustle tax.” However, this is not the case. There have been no changes to the rules about what income is or is not taxable. The only change is that HMRC will now have more information available to them because of the new reporting rules.

If you are simply selling unwanted personal items, such as clothes that your children have grown out of, then you are not trading & this income is not subject to any tax. However, to continue the example, if you are bulk buying children’s clothes with the sole aim of selling them on to make a profit then that is trading & you should be declaring this income to HMRC unless your gross sales are less than £1,000 for the tax year.

In rare instances the sale of high value personal items such as a painting or some jewellery could be subject to Capital Gains Tax.

Income from the letting of property through an online platform such as Airbnb is likely to be taxable, although again there is an exemption for gross income of less than £1,000 per tax year & also for income of less than £7,500 per tax year from renting a room (or rooms) in your home to a lodger or as a bed & breakfast/guest house.

If you receive any correspondence from HMRC as a result of these changes, or if you are trading or renting property but have not told HMRC about this, our tax team would be happy to advise. You can contact them by calling 01246 274121 & selecting option 2 or by emailing taxteam@mitchellsaccountants.co.uk