Millions of Britons earning extra cash through side hustles are being targeted by HMRC in a major crackdown on undeclared income, according to a BBC money expert. The tax authority now has enhanced powers to monitor earnings from popular platforms including eBay, Vinted, Airbnb, and Uber.
Gary Thomson, BBC Radio Scotland's resident tax expert and chief operating officer at Cardales Tax Consultants, has issued an urgent warning to anyone making money through online marketplaces or the gig economy.
How HMRC Is Tracking Your Side Income
HMRC has invested heavily in sophisticated technology that allows them to track digital transactions across multiple platforms. "The tax office now has the power to issue what's called a 'notice to file' to online platforms," Thomson explained.
This means companies like eBay, Vinted, and Airbnb are legally required to provide HMRC with detailed information about their users' earnings. The data includes:
- Total sales and transaction volumes
- Seller identification details
- Bank account information
- Payment processing records
The £1,000 Trading Allowance: What You Need to Know
Many people are unaware of the rules surrounding side income. "You have a £1,000 trading allowance," Thomson clarified. "If you earn less than £1,000 in a tax year from your side hustle, you don't need to declare it to HMRC."
However, once your earnings exceed this threshold, you must register for self-assessment and declare your income. The tax year runs from April 6th to April 5th the following year.
Who's Most at Risk?
Thomson identified several groups who should be particularly vigilant:
- Online sellers: People regularly selling items on eBay, Vinted, or Depop
- Gig economy workers: Uber drivers, Deliveroo riders, and TaskRabbit users
- Property renters: Those earning through Airbnb or other short-term rental platforms
- Freelancers: Individuals taking on extra work through platforms like Fiverr or Upwork
Consequences of Non-Compliance
Failure to declare taxable income can result in significant penalties. HMRC can charge:
- Back taxes plus interest
- Substantial financial penalties
- In extreme cases, criminal prosecution
Thomson emphasised the importance of keeping accurate records: "If you're making money on the side, keep a simple spreadsheet of your income and expenses. It could save you a lot of trouble down the line."
When to Seek Professional Advice
If you're unsure about your tax obligations, Thomson recommends consulting a qualified accountant. "The rules can be complex, especially if you have multiple income streams or your side hustle is growing into a proper business."
With HMRC's new digital tracking capabilities, the days of undeclared side income going unnoticed are rapidly coming to an end. Taking proactive steps now could prevent stressful and costly encounters with the tax authority later.
