HMRC issues £1,000 tax warning to everyone making money on the side

The HMRC is issuing a warning to individuals earning over £1,000 yearly from side jobs – which can range from online sales, dog walking, to babysitting – informing them that they are required to submit a tax return. They’ve also launched an online guide to assist people in deciphering when it's necessary to complete a self-assessment tax return.

The guide further alerts those who earn more than £6,000 from the sale of a single item, such as artwork or jewellery, could be subject to pay Capital Gains Tax on their earnings. Newly introduced government regulations on income disclosure encompass an extensive array of activities, including selling goods online, partaking in taxi or delivery services, creating content as social media influencers, and leasing space on platforms like Airbnb. Even routine tasks offered by younger individuals, such as babysitting, along with gardening, dog walking, and tutoring, fall under the new rules.

The updated HMRC guidelines state: "You may need to tell HMRC if you receive income through an online marketplace or social media, even if you do not need to pay tax on it. This could be whether it’s your main source of income or an additional source — sometimes called a ‘side hustle’."

It also details that the income could be in forms of money, gifts, or services acquired from:.

*selling personal belongings.

*selling products.

*providing services.

*producing online content.

*renting out property or land.

HMRC has an online checking tool available here which poses a series of basic questions about what individuals are selling. This includes a question related to the associated income and advises anyone earning more than £1,000 that they will need to complete a self-assessment tax return, even if this income does not make them liable for paying income tax.

Crucially, many online companies that facilitate side hustles, such as eBay, Vinted, Airbnb will also be providing information to the HMRC on the earnings of customers through their accounts. These will be cross-checked against tax returns submitted by individuals.

Sales of personal possessions The HMRC stated these include: clothing; ornaments; kitchen equipment; table and chairs; jewellery; computers and phones. The HMRC said: "If you’re only selling personal possessions, you’ll probably not have to pay Income Tax on these."

"However, depending on the items you sell and how much you sell them for, you may need to pay Capital Gains Tax. This applies to selling personal possessions where the item is worth more than £6,000."

The £6,000 limit for Capital Gains Tax that applies to a single personal possession also applies to the total value of items which form a set, for example: chess pieces books by the same author or on the same subject matching ornaments, such as vases or statuettes Example — cash in the attic.

When clearing out your loft and selling unwanted items on an online platform, generally you won't have to inform HMRC or pay tax on the earnings provided none of the items sold are valued over £6,000. For instance, if you're doing a spot of home remodelling and decide to sell a piece of artwork you bought for £1,600 five years ago for its current value of £8,000, then you'll need to report this profit of £6,400 to HMRC.

According to HMRC, individuals should be seen as a "trader" if they deal in goods that were purchased with the intention of making a profit or made by themselves, which can include hobby-related items. Take for example someone who upcycles second-hand furniture as a pastime and sells them; they would need to declare this income to HMRC.

Moreover, if you've started buying and selling items online, like importing cameras from abroad and selling them for profit, or advancing from offloading old clothes to procuring items from car boot sales with the aim to resell at a higher price consistently, you're entering territory where you might need to notify HMRC.

If you earn money from providing services for others, such as gardening, repairs, dog walking, taxi driving, delivering food, tutoring, babysitting and nannying, or hiring out equipment, you may need to inform the taxman. For instance, if you provide nannying and babysitting services and use an online platform to create a profile and advertise your services.

Similarly, if you generate income from creating online content, you might be required to complete a tax return form. This could include making online videos, producing podcasts, or social media influencing.

An example of this would be if you're a content creator and influencer with a social media channel where you review beauty products, earning advertising income on your videos and receiving gifts from the companies you review.

Renting out land or property, for instance through Airbnb, also requires notification. This could be a room in your main home, including as a bed and breakfast, your main home itself, a property that is not your main home, or even land, like your driveway.

An example of this would be if you rent out your spare room for short-term lets using an online platform, receiving regular payments from the platform after your guests have checked in. A tool to help people understand if they will need to fill in a tax return can be found here.