It’s easy to think that no one will know if you have a side hustle, but it can come back to bite you.
What Are the Legal Requirements Surrounding Self-Employment?
In the UK, all income over £1,000 in a given tax year must be reported using a Self-Assessment Tax Return.
You will not pay tax on the first £1,000 that you make – this is classed as your tax-free allowance and applies to each tax year – i.e. April to April. This applies to all income you receive, from side hustles to your regular day job.
Individuals also have a Personal Allowance – currently set at £12,570 – and won’t pay income tax on any earnings that fall below this figure. Any income over this threshold will be liable for income tax at the relevant rate as well as National Insurance contributions.
This can all be very confusing, especially for those who are newly self-employed. We recommend consulting Worcester accountants like randall-payne.co.uk/services/accountancy/worcester-accountants/ to get a better understanding of your financial situation. They can complete your self-assessment, ensuring you submit accurate information and meet deadlines and requirements.
What Happens If I Fail to Disclose My Income?
If you didn’t tell HMRC about your income, even if it fell below the taxable threshold, you could be given a penalty. Furthermore, HMRC charges interest on late payments of tax owed, so this can mean you end up paying more than you would have done if you had submitted your return on time.
Be sure to declare that side hustle.