Understanding the New 'Side Hustle' Tax Rules

The New ‘Side Hustle’ Tax Rules: What’s Changed?

On 1 January 2024, HMRC introduced a significant shift in how digital platforms such as eBay, Etsy, Vinted, Deliveroo, and Uber must operate. For UK contractors and freelancers who juggle multiple income streams, understanding these changes is crucial.

Let’s break down what’s new, who needs to take action, and how HMRC’s evolving approach could affect your side income.

"The rules target platforms—not individuals—but the result is more transparency and less room for error when it comes to declaring extra earnings."

What Are the New Rules?

The new regulations, based on OECD guidelines, require online platforms to:

• Collect information about users who generate income on their sites
• Report that information to HMRC and to the seller annually (by 31 January following each tax year)

Key platforms impacted:

• Online marketplaces (e.g., eBay, Vinted, Etsy)
• Gig economy apps (e.g., Deliveroo, Uber)

Thresholds for reporting:

• Less than 30 items sold per year, or
• Less than £1,700 in total annual sales

If you stay below both thresholds, your data will not be automatically reported to HMRC.

Table: When Will My Platform Report My Activity?

Activity Level	Will Platform Report to HMRC?
Sell old clothes occasionally	No, if under 30 items/£1,700
Regularly sell for profit	Yes
Deliver food occasionally	Yes, if over £1,700

Do You Need to Worry?

It’s a common scene: clearing out your wardrobe, listing extra tools, or selling old gadgets. Most people are not affected by these rules if their activities are casual and not for profit.
• Selling unwanted items: If you’re simply getting rid of things you no longer need—especially at a loss—this usually doesn’t count as trading income, so no tax is due.
• Trading for profit: If you buy items to resell, craft goods for sale, or operate as a delivery driver, you likely count as trading. Here, HMRC will expect to see your earnings declared.
• The £1,000 trading allowance: If your total trading or miscellaneous income is under £1,000 (before expenses), you don’t need to declare it. Beyond that, you must inform HMRC and may need to file a Self Assessment return.

Quick Reference: Should I Be Concerned?

Situation	Action Needed?
Selling old possessions	Usually none
Buying to resell for profit	Yes—report income
Earning under £1,000 total	No reporting
Earning over £1,000 (pre-expenses)	File with HMRC

The Bigger Picture: Why This Matters

The change is about transparency. By requiring platforms to report, HMRC can cross-check data and identify individuals who should be declaring side income but aren’t.
• Unreported income is more visible: If you consistently sell or earn over the thresholds and haven’t declared it, HMRC will now be aware.
• International data sharing: HMRC may share and receive data with tax authorities in other countries that have adopted the same rules.

“Even if your side hustle feels small, it’s worth checking your status. It’s better to be proactive than risk a penalty for undeclared income.”

Next Steps for UK Contractors

1. Review your platform activity: Are you selling or working regularly? Are you making a profit?

2. Calculate your annual earnings: Include all trading and miscellaneous income before expenses.

3. Check if you need to register for Self Assessment: If you cross the £1,000 threshold, register with HMRC and keep records.

4. Seek advice if uncertain: HMRC’s rules can be nuanced. If you’re unsure, consult a tax adviser or reach out to experts.