HMRC is issuing a warning to individuals using ‘side hustle’ platforms like Vinted, eBay, or Deliveroo, as new rules come into effect from January 1 in a bid to crack down on tax avoidance.

As of today, various websites, including eBay, Vinted, Airbnb, Fiverr, Upwork, Uber, Deliveroo, and Etsy, are obligated to record and report the earnings of users to HMRC. The tax office will then analyse this data, comparing it with individuals’ self-assessment reports to identify discrepancies, potentially triggering investigations in cases of suspected tax avoidance. The Mirror reports that HMRC is allocating approximately £37 million for this initiative, employing 24 full-time staff to implement and enforce the measures.

In the UK, individuals are allowed to earn £1,000 in additional income each tax year, known as the Trading Allowance, alongside their regular employment. Earnings exceeding this limit necessitate self-employment registration and taxation.

These new regulations for platform users form part of a broader crackdown on tax avoidance related to side hustles, freelancing, and self-employment. The focus is on individuals who under-report or fail to report their earnings, with no impact on those adhering to existing rules.

HMRC employs a self-assessment system to collect taxes from individuals not subject to automatic wage deductions, such as the self-employed, freelancers, or those engaging in additional work alongside their primary job. It is crucial to submit a self-assessment tax return if one falls into any of these categories.

To register for self-assessment tax, consider the following criteria based on your income and circumstances in the last tax year:

1. If your income from self-employment work exceeded £1,000.
2. If you received more than £2,500 from renting out property.
3. If you obtained more than £2,500 in other untaxed income.
4. If you received a P800 from HMRC indicating insufficient tax payment in the previous year.
5. If you need to prove your self-employment status, for instance, to claim Tax-Free Childcare.
6. If you wish to make voluntary Class 2 National Insurance payments to qualify for benefits.

Different registration methods apply depending on your circumstances, and you can determine your eligibility through the Gov.uk website’s questionnaire. If registration is necessary, you can do so online or by contacting the self-assessment helpline at 0300 200 3310.

The deadline for submitting online returns for the 2022/23 tax year is January 31. HMRC provides online resources, including video tutorials on YouTube and assistance on gov.uk, to help individuals complete their tax returns.