HMRC launches fresh tax crackdown on ‘side-hustlers’ selling online
HMRC has launched a fresh crackdown on online sellers with a side-hustle who don’t report their income to the Treasury.
The ‘One to Many’ letter campaign will ‘nudge’ individuals suspected of operating in the hidden economy. It will be based on data HMRC has received from online marketplaces.
The campaign is intended to prompt sellers on sites like Airbnb, Ebay and Vinted to come forward to disclose to bring their tax affairs up to date.
The letter states: “We have information that shows you’ve earned income from online marketplace sales up to the tax year ending 5 April 2023. You need to tell us about this income. This is because you may owe tax.”
Recipients have 30 days from the date of the letter to either declare their income or contact HMRC.
“People who receive this letter may be tempted to file it away but they absolutely should not ignore it,” Dawn Register, a tax dispute resolution partner at BDO said.
“Unpaid tax may be subject to late payment interest – currently at seven per cent and set to rise by a further 1.5 percentage points in April – plus penalties depending on the nature of the reasons for non-compliance, so it often pays to come clean at an early stage.”
New rules which oblige digital platforms to report data to HMRC about the incomes earned by their users came into force from January 2024, with the first reports delivered to HMRC by 31 January 2025.
Everyone in the UK has a £1,000 tax-free allowance on income that is additional to their core employment.
Still, additional income requires Brits to register as self-employed and submit a Self-Assessment tax return online. That could hit people with a side-hustle.
“This campaign should serve as a warning to those who are earning income from online platforms and marketplaces that they will need to ensure they comply with their tax obligations,” Register said.
“HMRC now has automatic access to much more data on digital platform users and their transactions, leaving few places to hide for people intent on hiding their earnings.”
A HMRC spokesperson said: “We receive regular information from online marketplaces and are contacting sellers who have not declared their income to ensure they pay the correct tax.
“Our Help for Hustles campaign helps those with income from side hustles understand their tax obligations and avoid any tax surprises.”