Side hustle sales threshold rising to £3000 per year from 2027
Side hustle sales threshold rising to £3000 per year from 2027
The increase in the current annual trading threshold from £1,000 to £3,000 a year is designed to help eliminate some of the confusion about what tax is payable on side hustle sales.
The Treasury has advised that the change to threshold reporting ‘will be before the end of this parliament’ and is likely to come into effect from 2027-28 tax year. As HMRC has to develop an alternative online service to report and pay any unpaid tax for the existing system, the change cannot therefore come in any sooner.
Up to 300,000 people, including those with side hustles, will no longer need to file a self-assessment tax return but will be able to notify earnings online and pay their tax bill, under the new system – details for which are not yet available!
The increase in the threshold will help people trading clothes online, dog-walking or gardening on the side or creating content online, all of whom are required to complete a tax return under current rules.
However, it is important to note that this is only an administrative change to the threshold to take people out of self-assessment tax returns.
Tax will still be payable on applicable sales over the £1,000 tax free limit.
‘From trading old games to creating content on social media, we are changing the way HMRC works to make it easier for Brits to make the very most of their entrepreneurial spirit,’ said the Exchequer secretary to the Treasury.’
‘Taking hundreds of thousands of people out of filing tax returns means less time filling out forms and more time for them to grow their side-hustle.’
‘We are going further and faster to overhaul the way HMRC works to make sure it delivers the Plan for Change that will help put more money in people’s pockets.’
New service for agents
In a move to try to alleviate service problems, HMRC is also planning to introduce a special service for tax agents and accountants so they will be able to escalate their queries if they have not had any response or a resolution from HMRC staff.
The Treasury has confirmed that HMRC will launch a new service to provide an escalation route for agents with self-assessment and PAYE queries which are over four weeks old – more details to follow.