With the rise in cost of living, it is no surprise that many have started monetising skills or hobbies to make a little extra cash. However, people are being warned that rules have changed regarding these extra earnings in 2024. This year, a crackdown on taxes will see the government checking bank accounts to make sure that people are paying taxes on their side hustles.
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The new rules are already in place, having come into play on the 1st of January 2024. They aim to prevent people dodging taxes, but they may impact people who simply didn’t realise they were supposed to declare these secondary earnings. Here are the common side hustles that will be affected, and how much you have to be earning to have to declare it.
Common side hustles affected
Alongside other savvy hacks, many people have taken up secondary jobs to top up their earnings. This often includes selling clothes or household items on sites like Vinted, Depop or Etsy. Platforms such as these will be required to collect data on people selling on their sites and share it directly with HMRC. Other side hustles to think about include renting out your property on Airbnb, renting out your driveway or parking place, or delivering food.
However, not everyone will have to declare their earnings from these secondary jobs. The changes in data-sharing are designed mostly to catch people who are earning on digital platforms that are hard to monitor.
Who will have to declare?
You will have to declare your earnings if you make more than £1,000 during a tax year. Anything less is considered ‘casual income’ and is waived. If you do earn over the threshold, you’ll have to declare it to HMRC through a self-assessment tax return.
Anyone who avoids or fails to pay tax on their secondary earnings could be hit with a heavy fine. Mike Parkes, technical director at GoSimpleTax, explained:
Selling via platforms like Vinted, Etsy and Depop can be a great way to earn an extra income and often that falls below the casual income bracket. Yet for some it can quickly add up and those earning above this will still need to pay tax on what they earn.
So, if you are earning somewhere near the limit of £1,000 a year, it could be worth putting a cap on your side hustle to avoid having to pay tax on the extra cash. And if you do earn more, be sure to declare it to avoid being hit with a fine!
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Sources used:
Birmingham Live: HMRC starts monitoring millions of bank accounts in tax crackdown
