Stricter tax regulations are reshaping the landscape for freelancers, self-employed individuals, and side gig workers on extra income earnings.
As the confetti settles and resolutions take shape, many self-starters and those with secondary occupations may feel a mix of excitement and trepidation. Amidst pledges and fresh starts, a notable development is the emergence of stricter tax regulations for those hustling on the side, often termed the "side hustle crackdown" in headlines. This development is worth understanding for individuals earning extra income through freelancing, self-employment, or the ever-popular side gig.
What does the "Crackdown" mean for you?
In essence, platforms like Etsy, Fiverr, Airbnb, and even Uber and Deliveroo are now required to report income earned by users exceeding a certain threshold directly to Her Majesty's Revenue & Customs (HMRC).
Here's what you need to know to navigate these new waters with confidence:
Know your threshold:
In the UK, you can earn up to £1,000 per tax year through your side hustle without needing to register as self-employed. This is your Trading Allowance, and exceeding it triggers the need for paperwork and tax obligations.
Get acquainted with self-assessment:
If your side hustle surpasses the £1,000 mark, it's time to become familiar with the world of self-assessment. It's not as daunting as it sounds, but seeking guidance from a qualified accountant can make the process a breeze.
Keeping meticulous records of your income and expenses from your side hustle is crucial. Receipts, invoices, and bank statements are your best friends here. The better your records, the smoother the self-assessment ride.
Honesty is the best policy, especially when it comes to your tax affairs. Don't try to skirt the system – it's not worth the potential penalties and headaches. Open communication with HMRC is key.
Seek professional help:
Don't go it alone! Navigating tax regulations can be complex, and that's where accountants come in. We can help you understand your obligations, complete your self-assessment forms, and ensure you're meeting all the requirements.
Remember, the "side hustle crackdown" isn't about discouraging entrepreneurial spirit. By being proactive, organised, and informed, you can continue pursuing your passions and earning extra income without any tax-related hiccups.
If you have any questions about the above, or would like more information specific to your circumstances, please enter your email address below and we will get in touch: