Related Articles
Tax admin changes mean the reporting threshold for trading income will be increased to £3,000.
The rule change has been announced by Exchequer Secretary to the Treasury James Murray and means up to 300,000 taxpayers will no longer be required to file a tax return.
According to Government figures, an estimated 90,000 of them will have no tax to pay and no reason to report their trading income to HMRC in the future at all. Others will be able to pay any tax they owe through a new online service.
Those affected by the rule change will include people trading clothes online, dog-walking or gardening on the side, driving a taxi, or creating content online.
The Government said increasing the income tax self-assessment (ITSA) reporting threshold for trading income from £1,000 to £3,000 will “free up time for taxpayers helping to create the conditions for economic growth.”
Although ministers have committed to upping the allowance during this Parliament, an exact date for the rule change is yet to be announced.
How life insurance can benefit your health and wellbeing over the decades
Sponsored by Post Office
Murray said: “From trading old games to creating content on social media, we are changing the way HMRC works to make it easier for Brits to make the very most of their entrepreneurial spirit.
“Taking hundreds of thousands of people out of filing tax returns means less time filling out forms and more time for them to grow their side-hustle.
“We are going further and faster to overhaul the way HMRC works to make sure it delivers the Plan for Change that will help put more money in people’s pockets.”
What is the trading allowance?
All workers in the UK get a tax-free personal allowance of £12,570 before they have to start paying income tax and National Insurance. Those making money through a ‘side hustle’ currently have a trading allowance of £1,000 on top of this – and don’t need to pay tax or National Insurance on this amount.
The trading allowance can be used against any trading, casual or miscellaneous income such as selling items online, or making money from the ‘sharing economy’ or hobbies.
