In an announcement made last week, the government has advised that it is changing the tax rules for people who make money from side hustles.  This change is set to benefit around 300,000 taxpayers who may no longer need to file a tax return. 
 
A ‘side hustle’ is defined as something you do in addition to your job to earn extra income.  This could be from making handcrafted items to sell, offering services such gardening or trading clothes online.
    
In a recent story we highlighted the tax rules you need to be aware of if you’re involved in making money from a side hustle.  The current rules state that anyone with trading income over £1,000 needs to submit a self-assessment tax return and may need to pay tax on earnings.
 
However in plans unveiled last week, the Treasury announced that it will increase the reporting threshold for trading income from £1,000 to £3,000.  This means that you may be able to earn up to £3,000 without having to file a self-assessment return and you will instead be able to report your earnings and pay tax owed through a “new simple online service”.
 
It is important to note that this new service is not yet available and the new way of reporting what you’ve earned to HMRC will not change how much tax you’ll have to pay or how much you can make before you start owing tax. 
 
It’s also worth highlighting that there are no specific timescales for this change to take place, with the government declaring it will happen “within this parliament”, which could be any time up to 2029.
 
So what does this change mean for me?
 
As this change has yet to come into effect, you must continue to follow the current rules if you make money from a side hustle – see our story for more details.
 
We will keep you informed when more information is available.
 
If you have any questions on this topic or any other tax issues, please get in touch.
 
Internet link: GOV.UK