Side hustles: what you need to know about paying tax in the UK

Side hustles: what you need to know about paying tax in the UK Whether it’s buying and selling clothes online or some freelance work on the side, plan ahead for potential tax issues Work out where you stand Since the start of 2024, online platforms such as Vinted, eBay and Airbnb have been required to share data with HM Revenue and Customs for any users who sell more than 30 items a year or earn more than about £1,700 (the threshold is set at €2,000) a year. However, this does not necessarily mean that those users owe any additional income tax. It’s important to be aware if you might face a tax bill, or have to provide paperwork to show that you do not owe anything. If you are selling old clothes or other unwanted belongings, these are classed as personal possessions, and you can sell as many of them as you like without having to pay tax on the income. The only exception is if you sell something for more than £6,000: that does have to be declared to HMRC , and you may need to pay capital gains tax on any profit. Other profits from trading, rent payments and freelance work do count towards your income tax calculations. This includes money earned from jobs such as tutoring, dog-walking or babysitting, or renting out any equipment that you own – whether they are things you do casually or regularly. This is not just about money you earn via online platforms. Profits you make through running a stall at a market are subject to the same rules, but you will need to keep track of the figures yourself. Know trading v selling “Proving whether you’re selling personal possessions or trading can be straightforward,” says Lee Murphy, the managing director at The Accountancy Partnership . “Be prepared to answer: are you buying items specifically to sell and make a profit? Are you selling regularly and systematically? And are you buying items, doing them up and then selling them?” These questions point toward what are known as “badges of trade”. If you answer yes to any of them, the...