{"id":6261,"date":"2025-03-13T09:18:36","date_gmt":"2025-03-13T09:18:36","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=6261"},"modified":"2025-03-13T09:18:38","modified_gmt":"2025-03-13T09:18:38","slug":"welcome-news-for-thousands-as-income-tax-reporting-threshold-set-to-increase","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/welcome-news-for-thousands-as-income-tax-reporting-threshold-set-to-increase\/","title":{"rendered":"Welcome news for thousands as Income Tax reporting threshold set to increase"},"content":{"rendered":"

In a move to simplify tax compliance and boost the economy, the Government has announced that the Income Tax Self-Assessment (ITSA) reporting threshold will rise from \u00a31,000 to \u00a33,000.<\/span><\/p>\n

<\/p>\n

This means that around 300,000 people will no longer need to file a tax return, including those selling on platforms like Vinted, or offering services such as dog walking.<\/span>\u00a0<\/span><\/p>\n

While we await an official date for this change, it will come as welcome relief for many who find tax returns daunting and time-consuming.\u00a0<\/span>\u00a0<\/span><\/p>\n

However, even if you fall below the reporting threshold, it is important to keep track of your income and expenses in case your situation changes in the future.<\/span>\u00a0<\/span><\/p>\n

Side hustles and tax<\/span><\/b>\u00a0<\/span><\/h3>\n

Side hustles have become an increasingly popular way for individuals to earn extra income, with two in five in the UK now engaged in some form of additional work.\u00a0<\/span>\u00a0<\/span><\/p>\n

Whether it is selling handmade goods, content creation, or renting out property, a side hustle can provide financial flexibility, but it can also come with tax implications that should not be ignored.<\/span>\u00a0<\/span><\/p>\n

With HM Revenue & Customs (HMRC) stepping up efforts to ensure individuals declare their side income correctly, you need to understand your obligations and how recent changes may affect you.<\/span>\u00a0<\/span><\/p>\n

HMRC\u2019s crackdown on undeclared income<\/span><\/b>\u00a0<\/span><\/h3>\n

HMRC is writing to individuals who may owe tax on online marketplace sales made in the 2022\/23 tax year and earlier.\u00a0<\/span>\u00a0<\/span><\/p>\n

The tax authority has identified a number of individuals who may have failed to declare income from platforms such as Vinted, eBay, and Etsy.<\/span>\u00a0<\/span><\/p>\n

If you are regularly buying or making goods to sell for a profit, you are likely considered to be trading, meaning that Income Tax may be due on any profits, depending on your total taxable income and available allowances.<\/span>\u00a0<\/span><\/p>\n

If you receive a letter from HMRC, you will need to take action within 30 days to confirm whether you owe tax or not.<\/span>\u00a0<\/span><\/p>\n

Failure to respond could result in a compliance check and potential penalties.<\/span>\u00a0<\/span><\/p>\n

Do I need to pay tax on my side hustle?<\/span><\/b>\u00a0<\/span><\/h3>\n

Not everyone making money on the side will owe tax. The trading allowance means that if your total sales are under \u00a31,000 (soon to be \u00a33,000) in a tax year, you won\u2019t need to report the income.\u00a0<\/span>\u00a0<\/span><\/p>\n

However, if your sales exceed this threshold, you may need to file a tax return and pay tax on your profits.<\/span>\u00a0<\/span><\/p>\n

Similarly, if you sell personal items for more than \u00a36,000 (and they do not qualify as chattels), you may be liable for Capital Gains Tax (CGT).\u00a0<\/span>\u00a0<\/span><\/p>\n

The tax-free CGT exemption has been reduced in recent years, falling from \u00a312,300 in 2022\/23 to just \u00a33,000 in 2024\/25, meaning more people could find themselves with tax liabilities.<\/span>\u00a0<\/span><\/p>\n

What should you do if you have a side hustle?<\/span><\/b>\u00a0<\/span><\/h3>\n
    \n
  • Keep accurate records<\/span><\/b> \u2013 Even if you believe you won\u2019t owe tax, keeping track of your income and expenses is essential.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
      \n
    • Check your allowances<\/span><\/b> \u2013 If your sales exceed \u00a31,000 (or \u00a33,000 when the new threshold is introduced), you may need to report your earnings.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
        \n
      • Consider the tax implications<\/span><\/b> \u2013 Are you trading or simply selling personal items? Understanding the difference can determine whether you owe tax.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
          \n
        • Respond to HMRC promptly<\/span><\/b> \u2013 If you receive a letter from HMRC, do not ignore it. Failing to respond within 30 days could lead to penalties.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n
            \n
          • Seek professional advice<\/span><\/b> \u2013 If you are unsure about your tax position, our accountants can help you ensure compliance.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n

            Side hustles can be a fantastic way to boost your income, but they do come with responsibilities.\u00a0<\/span>\u00a0<\/span><\/p>\n

            If you need help understanding how these changes affect you, get in touch with us today.\u00a0<\/span><\/b>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

            In a move to simplify tax compliance and boost the economy, the Government has announced that the Income Tax Self-Assessment (ITSA) reporting threshold will rise from \u00a31,000 to \u00a33,000.<\/p>\n","protected":false},"author":2,"featured_media":6264,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,125],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/6261"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=6261"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/6261\/revisions"}],"predecessor-version":[{"id":6262,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/6261\/revisions\/6262"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/6264"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=6261"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=6261"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=6261"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}