Prime Minister Andy Burnham has announced a change to tax rules that will allow people to earn up to £3,000 a year from a side hustle without paying tax or reporting it to HMRC. The change, which takes effect from April next year, is expected to affect around 400,000 people, saving them an average of £380 on their tax bill.
Tripled allowance for side hustles
In a statement, Mr Burnham said: "If you’ve got a side hustle, this is for you. Maybe you’re a keen Vinted seller, maybe you do some dog walking or pet-sitting in your spare time, maybe you’re a teacher doing some extra tutoring. Up to now, if you earned more than £1,000 a year from it, you had to start paying tax on it.
"But I think if you're putting in the extra hours, more of that money should stay with you. So, we've tripled the amount you can earn from a side hustle without paying a single penny of tax on it.
"From April next year, you’ll be able to earn up to £3,000 tax free and without having to report it to HMRC. For around 400,000 people, that could mean an average £380 off their tax bill. It’s a small measure, but one that makes it easier to earn a bit extra or give that business idea a go. Your side hustle should be exactly that — yours."
Series of crowd-pleasing announcements
The move is the latest in a series of announcements from the Prime Minister since he replaced Keir Starmer. Last month, he announced a crackdown on "headphone dodgers" who play loud music on public transport. In July, he said the government would remove VAT from electricity bills, reducing bills by an average of £45 a year, a change that took effect on October 1. Before last week's budget, he announced the removal of tariffs on more than 100 products, including baked beans, chocolate and gherkins, saving households around £21 on food shopping over a year.
However, some have questioned the focus on smaller issues. Writing in The Spectator, Jawad Iqbal, a broadcaster and former visiting senior fellow in the Institute of Global Affairs at the LSE, said: "Andy Burnham has an uncanny knack of saying things that sound good, determined to show voters that he is a leader who really cares. The measures targeting noise disruption on buses and trains are just the latest example of this strategy at work. But voters could do with hearing a lot more from the Prime Minister on his detailed answers to the big and important challenges facing the country."
Public reaction to the tax change
Not everyone supports the latest announcement. Replying to the Prime Minister's post on Facebook, Ed Broughton said: "I'm self-employed. Does this mean that I don't have to declare £3,000 of earnings? I think not. What's the difference between someone having a side hustle and me putting in an extra few hours every weekend?"
Another commenter, Luke Lancaster, asked: "Why not just increase the personal tax allowance by £3,000 so people don’t have to do side hustles to get by?" Andrew Partlett wrote: "Surely you could just raise the income tax threshold if you really wanted to make a difference. Then people might not need a 'side hustle'." Ben Saunders asked: "So what about those that are putting in the extra hours at work to cover their daily needs? Do we get £3,000 tax free?" And Mary Watson said: "How do you define a side hustle? I'm a self-employed gardener, smallholder, plant nursery, greetings card sales, should I pick one to be the side hustle?"
10-year plan coming soon
On Sunday, November 1, the Prime Minister also said on social media: "I entered Downing Street with a promise to deliver the biggest changes to Britain in 40 years and, 100 days in, I feel the need to stick to that more strongly than ever. Westminster has been failing people and places across the country for a long time. The decade since Brexit has been one characterised by drift and division.
"What has struck me most about my first three months in office is the sheer number of people who come up to me and say: 'Keep talking about hope'. I will, because I am in no doubt: there is a deep yearning in the country for bigger, more positive change than British politics has been serving up.
"In my first words as prime minister, on the steps of Downing Street, I committed to spell this out in a 10-year plan for Britain – and it is coming soon. Last week’s budget was an important milestone on the journey towards it. The chancellor and I decided early on that our first job was to create a platform of stability upon which we will bring through the bigger changes we want to make."
