HM Revenue and Customs (HMRC) is set to send dreaded brown envelopes to individuals who have earned £1,000 or more from a side hustle. The Labour government's tax authority has reminded people that they must inform HMRC if their side hustle income exceeds this threshold.
HMRC's Warning on Side Hustle Income
Taking to social media platform X, HMRC stated: "Unsure if you might need to complete a tax return? You may need to if you're newly self-employed, a landlord, a new partner in a business partnership, or earned more than £1,000 through a side hustle. Check using our free online tool."
Every individual has a single £1,000 tax-free allowance for each tax year, and all income from various side hustles counts towards this allowance. For example, if you earn £800 from content creation and £500 from selling crafts online, your total side hustle income would be £1,300, exceeding the allowance and requiring you to notify HMRC.
Record-Keeping Responsibilities
HMRC emphasised: "It's your responsibility to keep full and accurate records of all sales, income and business expenses – even if you use a tax agent or accountant. You'll need this information to complete your tax returns properly."
The taxman continued: "It's really important to stay on top of your tax affairs – make sure you pay what you owe as soon as you can and talk to us as soon as possible if you haven't paid for previous tax years."
Support for Taxpayers
HMRC added: "We're here to help people get on the right track with their taxes and avoid any penalties. Our support services can help find a manageable way to help get your tax affairs sorted out." For those unable to pay their tax bill in full, HMRC offers a 'Time to Pay' arrangement, allowing payment in instalments. "We will always work to resolve any issues and find a solution," HMRC concluded.
