HMRC have announced a tax that publications, such as The Independent, are dubbing the “side-hustle tax”. This tax affects those using sites such as eBay, Vinted and Etsy to sell items – usually second hand or homemade items.
The tax took effect on January 1, 2024, and aims to “clamp down on tax dodgers” according to The Independent.
Sites such as AirBnB are also affected.
People using these sites to make over £1,000 a year are obligated to register as self-employed. They must also file a self-assessment tax return.
You may be taxed if you make over £1,000 per year on the sites, and your data will only be given to HMRC if you have more than 30 transactions per year or make over £1,735.
This is supposedly so the tax will only target professional sellers who make a living from such sites rather than casual users.
However, £1,000 isn’t a whole lot, especially when renting out a space on AirBnB or regularly selling on other sites. This tax has a whole load of complications that could arise – especially for students.
MoneySavingExpert states that the rules on tax have not changed, rather, HMRC can now access information on sellers more easily.
MoneySavingExpert wrote: “If you didn’t owe any tax on these earnings before, and you continue to use these platforms the same way, you won’t have to start paying tax on them now.”
So, users should be checking if they do actually owe tax already or consider future earnings and if tax may apply on them.
There are loopholes, and HMRC does have a list to help you figure out if you owe tax or not. Schemes such as “rent a room” or other taxes such as capital gains tax may be used when selling online.
Although, this is a lot of reading and researching for the ordinary user – especially if they have a job and/or education on top of this.
The complexity has led many to give up selling on these sites already, fearing they will end up losing more money than they will make.
Since the announcement, videos have already spread online about sellers and users stopping using these sites due to the new tax. One seller had messaged a customer and said: “Sorry babe I’m shutting down my shop now. Not sure if you’ve seen but HMRC are taxing everyone on any sales of £1k and it’s just not worth my hassle.”
While that statement isn’t completely accurate, it shows the confusion and fear that small sellers are feeling.
Some students now face financial uncertainty as many made a small income from these sites to support them through their studies.
Students have already been hit with negative impacts of new policies and changes this year – such as the upcoming changes to the student visa, affecting international students. Now, they face a new problem due to this tax clamp down.
Of course, it is not just students that will be affected, but they have been dealt an unlucky hand recently.
Not everyone is eligible for SAAS or student loans, and even with those loans, the cost of living eats through these payments quickly. If you want to be able to afford anything other than rent and food, then usually a job or a ‘side-hustle’ is necessary. Now, with HMRC reminding us that this tax will be enforced more dutifully, it seems as though students are running out of options to earn some extra cash.
Featured Image Credit: Pexels.com
Fourth year student journalist studying Bachelor of Arts with Honours in Journalism Studies.
Words at Brig, The Daily Evergreen, Alloa Advertiser, Discovery Music Scotland, and The Mourning Paper.
