Up to 300,000 people with side hustles selling clothes on Vinted and eBay or making money from TikTok will no longer have to report their income to HMRC.
The threshold for having to file a self-assessment tax return for trading income will be lifted from £1,000 to £3,000 by the next election, set for 2029.
This will include people with side hustles selling vintage clothes on websites such as Vinted and eBay, selling handcrafted gifts on Etsy, dog walking, gardening, driving a taxi, delivering food, or creating online content.
However, they will still have to pay tax on anything earned over £1,000 – they just will not have to report their income until it gets to £3,000.
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Tax minister James Murray said: “From trading old games to creating content on social media, we are changing the way HMRC works to make it easier for Brits to make the very most of their entrepreneurial spirit.
“Taking hundreds of thousands of people out of filing tax returns means less time filling out forms and more time for them to grow their side hustle.
“We are going further and faster to overhaul the way HMRC works to make sure it delivers the Plan for Change that will help put more money in people’s pockets.”
The Treasury said the threshold increase will benefit about 300,000 taxpayers, with an estimated 90,000 of those not having to pay any tax or having to report their trading income to HMRC in the future.
It said 98% of those 300,000 are self-employed and report small trading incomes, while 2% report income from property.
To simplify the complex tax return system, the government also said a new online form will be introduced to declare cash earnings up to £3,000 for self-employed work.
At the beginning of the year, the government announced it was cracking down on the existing “side hustle tax” for people who are trading online – buying things to sell for a profit – so companies such as Vinted, Depop and eBay must now share information with HMRC.
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Any accounts selling more than 30 items a year, or who turn over more than £1,000 a year, will have that information provided to HMRC by the companies.
However, people selling their own possessions, such as getting rid of old clothes, are unlikely to need to declare their earnings and pay tax as they would not be considered as “trading”.
Content Source: news.sky.com