HMRC issues warning to anyone who's an online influencer or who has side hustle

HMRC has launched a new tool to help people who sell goods and services online to understand whether and how they need to tell HMRC about their income. The tool has been launched in response to new rules which oblige digital platforms to report data to HMRC about the incomes earned by their users.

The reporting rules for digital platforms came into force from January 2024, with the first reports due to be provided to HMRC by 31 January 2025. HMRC’s new tool is designed to help those who sell goods and services, sell personal possessions, rent out land or property (such as renting out your drive or a room in your own home), create online content or receive income through other sources such as income from savings and investments or selling property.

Dawn Register, a tax dispute resolution partner at accountancy firm BDO said: “The rules on the tax you need to pay on income or capital gains haven’t changed. However, there has been a great deal of confusion around when and how people need to pay tax on extra income or gains earned through side hustles such as selling goods online or earning money through social media content.

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“This new tool is a useful aid to those who are unsure about whether they will need to file a tax return and how they should declare their earnings and gains. Those who do sell online should be aware of the new rules which require digital platforms to report transactions data from users. Digital platforms have a deadline of 31 January to report this data to HMRC for the calendar year 2024, meaning this will cover at least part of the 2023-24 tax year. Those needing to file a return for this period will need to do so before 31 January 2025.

“Interestingly, HMRC’s new tool doesn’t appear to ask users about historic income earned in prior years – but if you had such income in the 2023/24 tax year, this may well spark HMRC to ask about earlier tax years. Taxpayers who have not correctly reported their earnings for previous years are advised to bring their historic tax affairs up to date to avert any nasty shocks later down the line when HMRC comes calling.

“Unpaid tax from earlier years may be subject to late payment interest - currently at 7.25% - and penalties, depending on the nature of the reasons for non-compliance, so it often pays to come clean at an early stage.”