Your hobby or passion project may have earned you a little extra income over the last year; or, perhaps you’re looking to take advantage of the interest you’ve had in your personal projects and you’re thinking of selling these on the side of your full-time (or even part-time) job with a little side hustle income. Any extra income would sure be welcome, especially with all the rising costs of late! But this little bit of extra income doesn’t need to be declared, right? Well…you actually may need to. Let’s explore.

The rise of the side hustle

There is no denying that things have been more than a little challenging financially over the last few years; what with the impacts of poor salary growth, the energy crisis, impact of war, Brexit and the pandemic, every aspect of our lives has become considerably more expensive. Many of us have used our intuition and have done what we can to claw back costs and have even looked at ways we can make an additional income.

Whether you’ve thought about pursuing an interest, hobby or passion, or utilising your skills and services to help others, these are all viable ways many individuals have managed to increase their income over the last few years; this type of revenue stream is known as a side hustle.

When you have to declare

There can be a misconception as to what ‘jobs’ would qualify. But if your hustle or part time job involves selling goods or services, renting out a room or even parking space, creating content for sponsorship – financial reward or with payment in goods/services, or you have managed to make a killing in your stocks and shares investments, you may need to register for self-assessment.

It’s important to note that whether you buy items just to sell on (perhaps you saw a good deal and want to sell it on), or it is a hobby that you actively promote and even plan to sell – maybe at markets, through Etsy, other online sites etc. you may need to submit a self-assessment.

However, finances also play a big part in whether or not you have to do this.

Generally speaking, if your side hustle earns you more than £1,000 per year, you’ll likely have to declare it to HMRC and you may need to pay tax and national insurance on your profits (income, minus expenses). Otherwise, you may be covered by the tax-free trading allowance if your income is lower than £1,000, or the income met certain conditions that HMRC would not require notification.

Thankfully, HMRC have a handy tool that you can use to determine if your extra income should be declared

Don’t try and evade declaring for self-assessment

Some new and important legislation came into effect on the 1st of January (this year) as HMRC is trying to clamp down on those avoiding declaring their extra income. As of now, digital platforms all around the world are obligated to share user and account information of individuals using digital platforms to sell goods and services. This is so HMRC can ensure that those that are expected to pay tax, are paying the correct amount.

There are many tools in HRMCs armour that can help them identify legitimate businesses on and offline. Although it can take time, it’s difficult to evade forever.

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