From 1 January 2024 HMRC's involvement with OECD (Organisation for Economic Co-operation and Development) will mean that Digital platforms such as Esty and Vinted, will now have to make annual reports to informing HMRC of individuals who use there platforms to sell goods or services, with the first annual report being routinely provided to HMRC by 1 January 2025 which will cover the 2024 calendar year.
Prior to the introduction of the new rules as most digital platforms are based outside the UK, HMRC did not have the power to demand mandatory annual reporting from overseas platforms, so the new rules will extended HMRC reach on a global basis to the 38 (and counting) countries that are involved with the OECD
WHAT INFORMATION WILL THE PLATFORMS HAVE TO REPORT
Apart from 'casual' or 'occasional' sellers (those selling no more than €2,000 and having fewer than 30 transactions a year), all digital platforms will be required to report the details of the seller and the volume of UK and any worldwide sales to HMRC.
WHAT THIS MEANS FOR THOSE WITH SIDE HUSTLE INCOME
In the UK you can currently earn up to £1,000 of untaxed income in any one tax year (6th April - 5th April), be that from a side hustle or rental income, should you be a receipt of income from both sources the £1,000 annual limit is available twice. It should be noted that the £1,000 threshold relates to income and not profits after expenses when different rules apply.
So whereas the €2,000 reporting limit imposed by the OECD may mean those with income of just over £1,000, based on current exchange rate limits may avoid having there details provided to HMRC by digital platform(s), they do still have report their income to HMRC.
HOW MUCH TAX WILL I PAY
The amount of income tax due on a "side hustle" can depend various factors including the amount of any other taxable income you may have from employment or elsewhere, as well the availability of any associated tax deductible expenses. So the applicable tax rate could be at either 0%/20%/40% or 45%. Also if the side hustle income is significant there could also be National Insurance Contribution implications.
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