Navigating Taxes on Your Side Hustles: What You Need to Know

Navigating Taxes on Your Side Hustles

Do you have one or more side hustles that brings in extra income, perhaps through platforms like Etsy? With the new tax rules due to take effect from the 6th April 2024 It’s essential to be aware of recent changes in tax regulations, ensuring you stay on the right side of the law. Here’s a quick guide on navigating taxes on your side hustles to help you understand your responsibilities.

Background: New Rules for Online Sellers

Earning more than £1,000 on top of your main income through online platforms requires you to declare and pay taxes. Previously, HMRC had the authority to inquire about the earnings of online businesses. Now, the UK government has adopted new rules from the Organisation for Economic Cooperation and Development (OECD) to combat global tax evasion.

Equal Treatment for Online Platforms

The government aims to treat online platforms more like traditional businesses. This means individuals using these platforms are now subject to the same income tax rules as any other business owner. It’s a move towards creating a level playing field in the world of commerce.

What You Need to Do: A Quick Checklist on Navigating Taxes on Your Side Hustles

  1. No Change for Tax-Compliant Sellers: If you’re already paying taxes on your online income, there’s no need to make any alterations. Keep up the good work!
  2. Tax-Free Allowances: Individuals benefit from a £1,000 tax-free allowance for income derived from property. Additionally, there’s a £1,000 allowance for “trading” income. This applies to various activities, such as tutoring, gardening, or selling new or second-hand items online.
  3. Record-Keeping: If your earnings fall below the mentioned thresholds, you may not be required to fill in a tax return. However, it’s crucial to maintain accurate records in case you’re asked for them. Keeping track of your financial transactions will help you navigate any potential inquiries smoothly.

Stay Informed, Stay Compliant

As a side hustler, understanding and adhering to tax regulations is vital. The recent changes signify a shift towards fair treatment for all business entities, whether traditional or online. By staying informed and fulfilling your tax obligations, you can focus on growing your side hustle with peace of mind. Remember, compliance not only keeps you on the right side of the law but also contributes to a more transparent and equitable economic landscape.

We offer a straightforward self-assessment tax service to help you stay compliant.

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