‘Side hustle tax’ to see online platforms share seller details with HMRC

2 January 2024, 14:44

Selling on eBay
Side hustle tax. Picture: PA

New rules that came into effect on January 1 mean digital platforms must share more seller information with tax authorities.

Online sellers making money from second-hand goods or homeowners who let out their spare rooms are among those who could end up paying tax on their “side-hustle” earnings under a New Year tax clampdown.

From January 1, digital platforms such as eBay, Airbnb, Etsy, Amazon and Vinted must share seller information with HM Revenue & Customs (HMRC) as part of a crackdown, dubbed the side hustle tax.

This will allow tax authorities to detect and tackle tax evasion, while also levelling the playing field with how traditional businesses are treated for tax purposes, according to HMRC.

It comes amid a number of tax changes for the start of 2024, including changes to the national insurance rate that employees pay.

The threshold for earnings from so-called online side hustles is set at more than £1,000 a year – above this, online sellers must register as self-employed and file a self-assessment tax return at the end of the financial year.

Food delivery and other services sold online will also be covered under the tax crackdown (Alamy/PA)

HMRC was already able to request information from UK-based digital platforms, but Britain has signed up to new rules that came into effect at the start of this year via the Organisation for Economic Cooperation and Development (OECD) allowing it to share information with other tax authorities to access data from platforms based outside the UK.

Online platforms will be required to report seller information directly to HMRC – although not until the end of January 2025.

This will include information such as tax ID, bank account details, as well as the amount and number of transactions made by sellers with sizeable trading activity.

It will apply to digital apps and platforms – including website providers to third-party sellers – and cover the sale of goods and services, such as handmade or second-hand clothes and items, alongside taxi hire, food delivery, freelance work, and the letting of short-term accommodation or driveway parking.

Another New Year tax change is coming on January 6, with the cut to the national insurance contribution (NIC) rate from 12% to 10% for earnings between £12,570 and £50,270.

But self-employed workers will have to wait until April 6 for national insurance cheer, when Class 2 contributions will be axed altogether and their main NIC rate will be cut from 9% to 8%.

Resolution Foundation conference – London
Chancellor Jeremy Hunt announced the changes in his autumn statement in November (PA)

The rate change was announced in the Chancellor’s autumn statement and will stay at this new level throughout the 2023/2024 tax year.

From January 1, consumers will also no longer pay VAT on period pants following a two-year campaign, saving up to £2 – or 16% – on average – following Jeremy Hunt’s pledge in his November statement to scrap the tax.

But there are some unwelcome tax changes in the offing for April, when the thresholds for dividend tax and capital gains tax will drop again, while the Government has yet to hint at any end to the freezing of tax thresholds.

Sian Steele, head of tax at Evelyn Partners, said: “The NI cut will bring a bit of New Year cheer for millions at a time when there are many pressures on household incomes.

“But taxpayers should put it in the context of a steady rise in the overall direct tax burden that has been driven by frozen income tax and other tax thresholds and allowances that have fallen in at least real and in some cases nominal terms since 2021-22, and will continue to erode take-home pay and disposable incomes until 2028.”

By Press Association

More Technology News

See more More Technology News

National Cyber Security Centre launch

National Cyber Security Centre names Richard Horne as new chief executive

The lights on the front panel of a broadband internet router, London.

Virgin Media remains most complained about broadband and landline provider

A person using a laptop

£14,000 being lost to investment scams on average, says Barclays

Europe Digital Rules

Meta unveils latest AI model as chatbot competition intensifies

AI technology

Younger children increasingly online and unsupervised, Ofcom says

Migrant Channel crossing incidents

Ministers will be told to use AI to screen migrants for threats, adviser says

Nothing smartphone

UK tech firm Nothing to integrate ChatGPT into its devices

The Google offices in Six Pancras Square, London

Google confirms more job cuts as part of company reorganisation

Person using laptop

Housing association reprimanded after residents’ data compromised

A screengrab of an arrest in connection with the LabHost website

Arrests made and thousands of victims contacted after scammer site taken offline

Social media apps on a smartphone

Three-quarters of public fear misinformation will affect UK elections – report

Businessman racing with a robot

TUC calls for AI to be regulated in the workplace

The ChatGPT website

AI chatbot ‘could be better at assessing eye problems than medics’

FastRig wingsail launch

Scottish-made wingsail set for sea tests after launch on land


Rollout of eVisas begins as Government aims for digital immigration by 2025

Elon Musk in 2024

X may start charging new users to post, says Elon Musk