The amount of people searching for information about ‘side hustle tax’ has increased by 1,415% due to concerns over HMRC online platform reporting rules
Although side hustle tax may be the most searched phrase, online selling platforms have also had a surge in the amount of people attempting to find out more information on their tax liability.
‘eBay tax’ searches have flown up by 874% and ‘Vinted tax’ by 882%. ‘Depop tax’ searches grew by 275% and ‘Airbnb’ tax searches increased by 117%.
These figures show just how many individuals are worried about whether they are complying with the long-standing tax rules, where earnings from selling goods which exceed £1,000 are taxable as the seller becomes a ‘trader’ under tax rules.
James Ewen, founder of SEOtagg, which compiled the data, said: ‘The extraordinary surge in search queries for terms like “Vinted tax” and “eBay tax” underscores a pivotal moment in the UK's digital economy.
‘This data reflects deep public concern and confusion over the “side hustle tax”, highlighting the urgent need for clear guidance and support as individuals navigate these significant changes amidst a challenging economic climate.’
In terms of geographic search, Bristol had the highest online traffic in relation to ‘side hustle tax’, followed by Manchester and Liverpool. The least number of searches in the UK came from Glasgow.
Although many might be worried that they have not declared earnings to HMRC for selling old clothes and unwanted items on the plethora of online platforms, the Low Income Tax Reform Group (LITRG) said that media coverage had created confusion when it referenced ‘a new tax’, when actual tax rules were not changing. Only the platforms themselves are affected by the new HMRC reporting rules.
LITRG stressed that this was not a new form of tax and there is no change to the obligations for paying tax on these sales as those who earn over the threshold have always had to pay this. There will now just be more data shared between the online platforms and HMRC to track those who do earn over the £1,000 cap.
Victoria Todd, head of LITRG said: ‘We understand there is a lot of worry among people who sell via online platforms about the changes, including for those who sell personal items they no longer want or to clear space in their home.
‘However, we want to reassure sellers that there is no new “side hustle tax” and no changes to the tax rules about what income needs to be declared to HMRC or when it needs to be declared.
‘In particular, people selling unwanted personal items such as their children’s old clothes or toys are not likely to be “trading”. Therefore, even if it is a significant amount, any money they make is generally not taxable.
‘If you are required to declare your income and you are not doing so, then you need to take some action to bring your tax affairs up to date. If you have not declared income for previous tax years, you may also need to take action to correct those years. Failure to meet tax obligations, including declaring certain income, can lead to penalties and interest charges.’
HMRC expect to collect data from two to five million individuals and businesses.