UK Side Hustle Tax Threshold: When Earnings Require HMRC Reporting

POLICY WIRE — London, UK — Engaging in side hustles such as dog walking, reselling items on platforms like Vinted, or providing tutoring services has become increasingly popular. However, there’s a defined limit to the amount one can earn from these activities before it becomes necessary to report the income to HM Revenue and Customs (HMRC) and potentially pay tax.

The HMRC stipulates that any income generated from a side hustle must be declared if it exceeds the Personal Allowance threshold, which for the tax year 2023/2024 stands at £12,570. Income below this threshold is typically tax-free. However, earnings above this amount are subject to income tax at varying rates depending on the total income.

For those operating under the umbrella of self-employment, such as freelance tutors or dog walkers, it’s imperative to register for Self Assessment with HMRC if their income surpasses the Personal Allowance. This registration allows individuals to file a tax return annually, detailing their earnings — and allowable expenses.

Resellers on platforms like Vinted should also be mindful of the tax implications. If the profit from selling items exceeds the Personal Allowance, it must be reported. The profit is calculated by subtracting the original purchase price of the items from the selling price.

Failure to report income that exceeds the threshold can result in penalties from HMRC. It’s advisable for individuals engaged in side hustles to keep accurate records of their earnings and expenses to facilitate tax reporting and potentially reduce their tax liability through allowable deductions.

For more detailed guidance on tax obligations related to side hustles, individuals are encouraged to consult the HMRC website or seek advice from a tax professional.

Reporting by Policy-Wire (PW)