HMRC will have a new set of powers from January 1 2024 that will require digital platforms to supply the details of individuals who are providing services or selling goods including those who operate small businesses, second-hand sellers, freelances, delivery drivers, taxi drivers and property owners.
The information will include individual’s personal details as well as their bank details.
Side hustle new rules
Research suggests a fifth of UK adults have taken on a side hustle since the start of the COVID-19 pandemic in March 2020, and one in six will be earning more than £1,000 a month in addition to their main income.
The Government has implemented the Organisation for Economic Co-operation and Development’s (OECD) Model Reporting Rules for Digital Platforms, as part of a global clampdown on tax evasion, which will enable HMRC to detect and tackle non-compliance.
As a result, apps and websites will be required to share the details of sellers income with the tax authority. Individuals will also be given the details they need to ensure they pay the correct amount of tax.
HMRC already has the power to request seller details and bank account details from UK-based platforms, but the new rules will allow it to investigate the tax affairs of those earning money through such companies that are based abroad – this includes Lithuania-based Vinted and Etsy, which has its headquarters in New York as well as Airbnb and Uber, which are based in the US.
HMRC will also be able to share information with other OECD-participating tax authorities where sellers are a tax resident, giving these new rules a global reach.
Platforms will be expected to collect data from January 1, 2024, with the first reports starting in January 2025.
Report additional income
When it comes to additional income streams, some taxpayers may need to register for self-assessment and report this income to HMRC, to ensure their tax position is correct.
Therefore, if you are earning greater than the £1,000 property/trading allowance then you should seek advice about bringing your tax affairs up to date. For those with annual income from a side hustle below £1,000 there will be no requirement to report this extra income to HMRC.
For more advice and support about tax and additional incomes please call 0808 1445575 or email help@armstrongwatson.co.uk
