Side hustles are going to be taxed in the UK in January 2024. Here’s everything you need to know
Side hustles are everywhere these days. I mean, why wouldn’t you take up crocheting if it could land you a few extra pennies every month? Plus, think of all the cute scarves. Sounds ideal I know, but the problem is, the sneaky Tories are about to sh*t all over this legitimate money maker. You know HM Revenue & Customs (HMRC)? Well, come January 2024, the tax man is going to be coming for you.
Amid a never-ending cost of living crisis, more and more gen Zers are seeking out side gigs in order to try and earn some extra dough. Side hustles can include working as a part-time Deliveroo driver, becoming an online tutor, or even starting a cute cheeky little YouTube channel.
This week, your blonde has a fresh bob and a renewed sense of financial responsibility. So, it would make sense for me to take this opportunity to share my newfound knowledge with all you babes. I’ve been doing my research, and I’ve got all the goss on the upcoming side hustle tax.
Side hustles are going to be taxed in 2024
The UK government is currently pursuing a massive clampdown on tax evasion. For context, this tightening of restrictions is mainly centred around targeting Depop girlies who happen to sell an Adidas jumper or two online, not the big bad CEOs who hide all of their assets in the Cayman Islands. To give the Tories credit, they are consistent.
From January 2024, any digital platform that allows people to earn extra money on top of their main income will be required to send HMRC all users’ information—specifically, their bank account details. Getting taxed, or being stressed that you’re evading tax somehow, can be a really overwhelming feeling and experience. So, let’s run through all the things you’ll need to consider in order to work out whether or not this new scheme will impact you.
How do I know if I should be getting taxed on extra earnings?
Straight off the bat, if your side hustle earns you less than £1,000 per tax year (6 April to 5 April) then you won’t need to declare anything as these earnings are covered by the trading allowance.
Similarly, if your additional income is made from monetising your property in some way—like renting your driveway—up to £1,000 can be covered by the property allowance, as reported by Which.
The main reason for these changes is that HMRC has signed up to the Organisation for Economic Co-operation and Development (OECD) rules. The OECD is an intergovernmental organisation which has 38 countries as members and operates as a policy hub for economic prosperity.
Because so many digital platforms are based overseas, a number of people have been able to avoid paying tax on certain side incomes, however, HMRC’s inclusion into the OECD will mean that investigations can take place which look at the tax affairs of people earning an income via a company that operates abroad.
Register for self-assessment ASAP
If you already know that you’re absolutely slaying the Depop or Deliveroo side hustle game (meaning you think that you will be earning over £1,000 per tax year), you will need to make sure you file a self-assessment tax form. But, for anyone who, like me, spends more time on Hinge than taxesfordummys.com, this can be a confusing process.
I mean, I’m still trying to wrap my head around investing, so let’s break this one down super simply.
How to file a self-assessment tax form
The official deadline for registering for self-assessment was 5 October, so if you think that you do need to file a tax return for any income that’s been earned in the 2022 to 2023 tax year and you haven’t yet registered, it’s likely you’ll face a fee. That being said, as long as you sign up and file your tax return before January 2024, there’s also a chance they’ll let it slide.
Once you’ve signed up, you should receive your Unique Taxpayer Reference number (UTR). When you go to actually file the tax return, make sure to pick some background music that will keep you calm and focused—we don’t want to make any mistakes.
Include any information on all your sources of income, and try to keep a record of any invoices, receipts and bank statements to back up your claims.
Also, now that your side hustle is gaining momentum, you’re going to need to watch out for any tax deadlines. For example, the deadline for filing a paper tax return is 31 October. The cut-off date for both filing an online tax return and paying the bill is 31 January. If you miss any of these deadlines, you could get served with a nasty penalty or late payment fee.
Side hustles are where it’s at, any TikToker will tell you that. But if you are thinking about taking up a part-time gig for some extra moolah, make sure to keep on top of your earnings. That money’s yours, babe! Don’t let them snatch any more of it than they have to.
