Side Hustles: New Tax Changes
As the gig economy continues to flourish, many people in the UK are turning to “Side Hustles” to earn an additional income. However, with the new tax year comes some new changes that every side hustler needs to be aware of.
The New Tax Rules
Digital Platforms Reporting Earnings: From January 1st, digital platforms like eBay, Airbnb, Etsy and many others are required to report user earnings to HMRC. This change aims to ensure fairness and transparency.
£1,000 Threshold: If you earn more than £1,000 annually from your side hustle, you must register as self-employed and file a tax return. This is part of a broader initiative to reduce tax evasion and ensure everyone pays a fair share.
What Does This Mean for You?
For the Compliant Hustler: If you’ve already been declaring your side hustle earnings, little will change for you.
For the Newcomer: If your earnings exceed £1,000, it’s time to familiarise yourself with self-assessment tax returns. This process can be daunting, but it is important for legal compliance.
Property Income: You can earn up to £7,000 tax-free under the Rent-A-Room Scheme.
National Insurance Contribution Changes: From January 6th, the rate for certain earnings will drop and from April 6th, Class 2 Contributions for self-employed workers will be removed – reducing the main NIC rate.
Navigating the Changes
As the landscape of work evolves, so too does the tax system. These changes are vital for anyone involved in the gig economy, as it ensures that everyone stays on the right side of the law and helps avoid any potential penalties.
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