Taxman frees 300,000 side hustlers from return headache

This is an abbreviated article by Liz Barclay – read the full article at Business111.com/news

Around 300,000 freelancers, side hustlers and small-scale earners are set to escape the hassle of completing a full Self-Assessment tax return as the reporting threshold for trading and property income rises from £1,000 to £3,000. Tax will still be due on income above the existing £1,000 allowance, but a simpler reporting system should replace the full return for many people.

The change is aimed squarely at people earning relatively small amounts from freelancing, gig work, property or fledgling businesses.

Currently, earning more than £1,000 from trading can bring someone into Self-Assessment. Under the new system, those with qualifying income between £1,000 and £3,000 should instead be able to use a simplified HMRC reporting service.

Those earning £1,000 or less remain covered by the existing trading allowance, while people above the new £3,000 threshold will generally still need Self-Assessment.

It’s an important distinction: the Government isn’t increasing the £1,000 tax-free trading allowance to £3,000.

It is increasing the point at which people have to use the full Self-Assessment system.

That means someone earning £2,500 from a side hustle could still have taxable income but should no longer have to complete an entire tax return simply to declare it.

For micro-businesses, that’s significant.

Someone testing a business idea by tutoring, gardening, selling crafts or doing freelance work shouldn’t need an unnecessarily complicated tax process simply because they have earned a relatively modest amount.

The new service is intended to make reporting that income much easier, reducing paperwork and helping HMRC deal with fewer unnecessary Self-Assessment returns.

It should also reduce the risk of people making mistakes simply because they don’t understand a system designed to deal with much more complicated financial affairs.

Around 300,000 people are expected to benefit.

For established businesses, this may look like a small reform. For someone taking their first tentative steps into self-employment, however, removing unnecessary bureaucracy can make a genuine difference.

The UK’s tax system remains complicated and small businesses still carry a disproportionate administrative burden.

But this reform moves in the right direction: regulation based on the size and complexity of the activity rather than treating a £1,500 side hustle like a fully established business.

For once, we’re talking about red tape being removed rather than added.

Can we have some more?

This is an abbreviated article by Liz Barclay – read the full article at Business111.com/news

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