There has been a fair bit of chatter online about a new side hustle tax that came in from 1 January 2024, but in fact this is NOT a new tax at all. All that has changed is that online marketplaces (such as Amazon, Airbnb, Deliveroo, eBay, Etsy and Uber) must now report directly to HMRC details of income made by sellers trading via their platforms.
The move has sparked outrage among people who earn additional income through selling items online, with HMRC accused of “daylight robbery” and “pure greed”. Some of those affected are questioning why the government is always targeting people on low incomes who rely on selling items in order to make ends meet.
Importantly, you do not need to pay tax on personal possessions that are sold for less than £6,000.
If you are selling items that are not your personal possessions, e.g. homemade crafts, this income has always been taxable if it exceeds the annual trading allowance, currently set at £1000 per annum. The real problem is that most people have been unaware that this income should be declared to HMRC and tax paid on it.
The new requirement for online platforms to report sellers income to HMRC is purely a mechanism to help ensure that everyone is paying tax appropriately. It is NOT a new tax.
The annual trading allowance is certainly a very low figure, and many sellers will earn more than £1k per annum. That’s why we consistently lobby the Chancellor to raise this threshold, and we will repeat our campaign ahead of the Spring Budget on 6 March 2024.