HMRC has given a warning to anyone pocketing over £1,000 annually from their side hustles – be it selling online, dog walking or even babysitting – you'll need to understand tax returns. They've dropped an online guide to help folks figure out when they've got to tackle a self-assessment tax return.
Watch out, because if you're cashing in more than £6,000 from a one-off sale, like artwork or jewellery, you might have to pay Capital Gains Tax on the profit. The government's new income disclosure rules are casting a wide net, covering everything from eBay sales to Uber driving, crafting viral content as an influencer, or renting out your pad on Airbnb. Even pocket-money earners like babysitting, gardening, dog walking and tutoring are in the spotlight.
HMRC said: "You may need to tell HMRC if you receive income through an online marketplace or social media, even if you do not need to pay tax on it. This could be whether it’s your main source of income or an additional source — sometimes called a ‘side hustle’."
And that income isn't just cold hard cash; it includes any money, presents or services you receive from selling your old treasures, selling goods, providing a service, creating online content, or letting out your digs or garden patch.
HMRC has an online checking tool here which asks a series of basic questions about what people are selling. This includes a question relating to the associated income and advises anyone bringing in more than £1,000 that they will need to fill in a self-assessment tax return, even if this income does not make them liable for paying income tax.
Crucially, many online companies that support side hustles, such as eBay, Vinted, Airbnb will also be providing information to the HMRC on the earnings of customers through their accounts. These will be cross-checked against tax returns submitted by individuals.
Sales of personal possessions include clothing; ornaments; kitchen equipment; table and chairs; jewellery; computers and phones.
HMRC stated: "If you’re only selling personal possessions, you’ll probably not have to pay Income Tax on these. However, depending on the items you sell and how much you sell them for, you may need to pay Capital Gains Tax. This applies to selling personal possessions where the item is worth more than £6,000."
The £6,000 limit for Capital Gains Tax that applies to a single personal possession also applies to the total value of items which form a set, for example: chess pieces, books by the same author or on the same subject, matching ornaments, such as vases or statuettes.
Cash in the attic
Found yourself on a decluttering spree and looking to flog your old bits in the attic online? You probably won't have to tell the taxman or cough up any cash to HMRC for your sales, as long as what you're selling is not worth more than £6k.
If you are renovating your house and decide to offload an expensive painting you've had for years on the web. You got it for only £1,600 five years back, but now it's worth a massive £8,000. That profit of £6,400 might just catch HMRC's attention, so you'd better be ready to report that extra money.
Now listen up if you're a consistent seller. HMRC will start to see you as a "trader" if you're buying things with the intent to sell them for a profit, crafting your own wares, or even if your hobby includes earning money here and there.
For instance, if you get enjoy sprucing up old furniture and selling it online, then you ought to know that HMRC will want a heads-up about your earnings. Bringing over cameras and all sorts to sell from abroad and making money? Yep, that’s another signal for a little chinwag with HMRC about your extra income.
Or maybe you started by selling some old clothes and now you're picking up bits and bobs from car boot sales or charity shops, with the aim to sell them online for a bit more than you paid. If this is becoming more regular then you should inform the HMRC.
If you're earning cash from providing services such as gardening, repairs, dog walking, taxi driving, food delivery, tutoring, babysitting, nannying or equipment hire, you might need to inform the taxman. For instance, if you offer babysitting and nannying services and advertise them on an online platform, this could be taxable income.
Similarly, if you're making money from creating online content, you may have to fill in a tax return. This could include activities like producing online videos, podcasts, or social media influencing. For example, if you're a beauty influencer who earns advertising revenue from your videos and receives gifts from companies for reviews, this is considered income.
Renting out land or property, perhaps through Airbnb, also falls under this category. This could be a room in your main home, your entire home, a property that isn't your main home, or even land like your driveway. An example would be if you rent out your spare room for short-term lets via an online platform and receive regular payments after guests check-in.
To help understand whether you need to fill in a tax return, there's a tool available here.
English (US) ·