HMRC has introduced a new online tool to help those with side hustles determine whether their additional earnings are taxable. This move coincides with upcoming rules for online marketplaces, set to take effect in January 2025. The new regulations will require platforms to report all sales made by individuals directly to HMRC, impacting content creators and influencers earning through platforms like YouTube and Twitch.

The tool functions as a questionnaire, beginning with a query about the source of additional income – whether from selling goods or services, renting out property, creating online content, or other activities. However, selecting “anything else” redirects users to a message clarifying that the tool only applies to sales, services, or rental income.

If tax is owed, the tool displays a green banner prompting users to inform HMRC and includes links for registering or completing a self assessment tax return. The changes give HMRC greater insight into online sales activity, meaning individuals with undeclared income could face late payment interest, currently 7.25%, along with potential penalties. Experts advise addressing unpaid taxes promptly, as early disclosure often reduces penalties and interest.

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.”

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