For anyone with a side hustle, whether that’s making extra income from Airbnb, getting assignments through a freelancer jobs platform or selling items on Ebay, HMRC will have more data on your income.
Starting January 1, 2024, Her Majesty’s Revenue and Customs (HMRC) will implement a new rule that will require freelancer platforms to report their users’ earnings to the tax office. This rule is designed to crack down on tax evasion and ensure that everyone is paying their fair share.
The rule will apply to all freelancer platforms that operate in the UK, including popular platforms such as Upwork, Fiverr, Airbnb, and Uber. These platforms will be required to report to HMRC the total amount of income that each user earns through their platform.
HMRC will then use this information to identify taxpayers who may be under-reporting their income. If HMRC finds that a taxpayer has not reported all of their income, they may be subject to a penalty or even prosecution.
The new rule is part of a wider effort by HMRC to clamp down on tax evasion. In recent years, HMRC has increased its focus on the gig economy, where many people are now working as freelancers or contractors.
HMRC says that the new rule is necessary to ensure that everyone is paying their fair share of tax. The agency says that it is estimated that £1.2 billion in tax is lost each year due to tax evasion in the gig economy.
The new rule has been welcomed by some tax experts, who say that it will help to create a fairer tax system. However, other experts have expressed concerns about the rule, saying that it could be burdensome for freelancer platforms and that it could lead to an increase in tax audits.
If you are a freelancer or side hustler, you should be aware of the new rule and make sure that you are reporting all of your income to HMRC.
If you earn more than £1,000 from freelancing or side hustling in a tax year, you must register as self-employed with HMRC. You will then need to file a self-assessment tax return each year and pay any tax that you owe. This is regardless if you earn more than £1000 as a freelance consultant or dog walker.
The new rule does not change your obligation to report your income to HMRC. However, it does mean that HMRC will have more information about your earnings, so it is important to make sure that you are reporting all of your income accurately.
HMRC has also published a number of resources to help freelancers and side hustlers understand their tax obligations.
Source: Freelanceinformer
HMRC website
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