1 month ago
In a bid to enforce tax compliance among Britain’s entrepreneurs and side hustlers, the Government has implemented new rules that will allow HM Revenue & Customs to monitor millions of bank accounts.
The controversial move aims to tackle tax evasion and ensure that UK residents earning additional income through activities like Airbnb hosting, driveway rentals, food delivery, or e-commerce are paying the appropriate taxes. This article delves into the implications of these changes and provides insights into how entrepreneurs can professionalise their side hustles and ensure they stay on the right side of the law.
As of January 2024, HMRC has enhanced its ability to monitor the bank accounts of individuals engaged in ‘side hustles’ in the UK. The taxman’s focus is on those who earn extra revenue on the side of their primary job, such as Etsy, Depop and Vinted sellers.
Thanks to relaxed rules, HMRC can now legally access bank account details to ensure all income is taxed appropriately and close any so-called loopholes.
To streamline this monitoring process, platforms like Airbnb and Etsy will be required to collect and share data on the earnings of their UK-based users directly with HMRC. This measure specifically targets digital platforms, which have traditionally been challenging to monitor effectively. By obtaining information directly from these digital services, authorities are hoping to increase transparency and accountability in reporting on-the-side income.
Only some side-hustlers will be affected by these changes. Individuals are only required to declare additional income if it exceeds £1,000 during a tax year, as anything below this threshold is labelled 'casual income'. Those who do surpass this limit must report their earnings to the HMRC via a self-assessment tax return. Failure to comply is punishable with new penalties and fines.
For British entrepreneurs looking to professionalise their side hustles and navigate new regulations, there are some key considerations to make. First and foremost, side-hustlers should be aware of tax rules and thresholds associated with additional income, staying informed about any changes.
Maintaining detailed records of bank account incomings, outgoings, and taxes paid is advisable, as is researching accounting tools and software that could make financial management more straightforward.
If in doubt, it’s best to consult with a tax professional or accountant who can provide tailored advice based on individual circumstances.
As the Government keeps a watchful eye on side hustles, entrepreneurs must stay informed and adapt to the evolving regulatory landscape. By understanding their tax obligations, keeping accurate records, utilising accounting tools and seeking professional advice when necessary, individuals can professionalise their side hustles and ensure compliance.
This proactive approach mitigates the risk of fines and gives budding startups every chance of becoming successful, law-abiding businesses.
Whether you run a growing startup or you’re simply professionalising your side hustle, having a current account is necessary for all registered companies.
A wide array of business account providers offer a range of accounts that feature overdrafts, online account management, and app integration. Having a business-specific account often helps entrepreneurs draw a clear line between personal and business finances.
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