Brits planning to make extra cash through a side hustle have been urged to double check if they need to pay extra income tax. The post-Christmas period often involves scrimping and saving to make up for festive overindulgence, with some even pawning unwanted gifts or unused personal items. HM Revenue and Customs (HMRC) has issued new guidance for sellers on whether they will have to pay tax on the additional income or not to avoid nasty last-minute surprises.
Those selling used clothes or old TVs don’t need to pay extra, because such small-scale “hustles” don’t make them official traders. Only sales of unwanted personal belongings that exceed £6,000 in a single sale warrant informing HMRC, as sellers could be eligible for capital gains tax.
Those selling items that they have either made or brought could have to pay extra income tax however, when earnings exceed £1,000 on top of a main job over the duration of a tax year.
“If you do need to tell us about money you’ve made from side hustles, you will need to register for Self Assessment as a sole trader,” HMRC says.
“That’s because HMRC likely classes your side hustles as ‘trading’ – as you receive income from goods or services. If you don’t tell HMRC when you need to, you could end up with an unexpected tax bill or penalty.”
Examples of “trader” selling include buying items from charity shops with the intention of selling them for more money than you paid for them and making greeting cards to flog online.
Meanwhile, listing personal belongings like old toys and clothes online from time to time doesn’t usually require notifying HMRC, unless earnings exceed the £6,000 threshold.
“[If] you use online platforms and apps to sell some sweaters you no longer wear [and] you occasionally sell unwanted gifts and items from around your home when you’re having a clear out, none of these are worth anywhere close to £6,000,” HMRC says. “You don’t need to tell us and won’t pay tax.”
