Rent out your home on Airbnb? Drive for Uber? Freelance on Fiverr? From January, these platforms will record your income and soon report it to HMRC…
The growing number of gig workers, people with side hustles and those earning money from the likes of Airbnb, Upwork, Uber, Deliveroo and Etsy have been urged to ensure their tax compliance – given from 1st January 2024, HMRC has instructed these digital platforms to record how much money people make by selling their services on them.
It’s part of a wider tax crackdown from HMRC on people boosting their income via side hustles, freelancing and self-employment, which will see the rapidly growing number of gig platforms responsible for recording and, in time, reporting sellers’ earnings to the tax office.
Individuals themselves will be expected to continue submitting and paying tax on their self-employed income every year to HMRC as part of the self-assessment tax return.
The reason behind the introduction of the ‘Model Reporting Rules for Digital Platforms’ is so HMRC can spot discrepancies between information provided by a digital platform and the individual, giving the tax office grounds to launch an investigation.
These rules will come into effect on New Years Day, with digital platforms to start recording sellers’ income from then before reporting it to HMRC a year later. HMRC will invest £36.69m in this initiative and employ 24 full-time staff to launch and enforce these measures, which aim to “bear down on”, “detect and tackle tax evasion”.
Commenting on the rapidly approaching roll-out, Seb Maley, CEO of tax insurance provider for self-employed workers, Qdos, said: “This legislation has flown under the radar, but will have big implications for anyone renting their place out on Airbnb, freelancing on Upwork or Fiverr, or driving for Uber – whether that’s as a side hustle or full-time job.
“The crux of it is that HMRC doesn’t trust the growing number of people with side hustles in the UK to accurately report how much money they’re making this way – so the tax office will go directly to these platforms, who will become responsible for recording this information and handing it over to HMRC.
“HMRC will then compare it with the tax returns submitted by these people. If the numbers don’t add up, HMRC has everything it needs to launch a tax investigation. Needless to say, it’s vital that people earning money this way make sure of their tax compliance.
“The Minimum Trading Allowance is £1000 a year. So anyone earning more than this via self-employment, and above the personal allowance, needs to pay tax on that income. The latest figures suggest there are 7.25m gig workers in the UK, with one in six adults working a gig job once a week – with this in mind, the incoming measures are set to impact millions.”