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As the cost-of-living crisis continues to impact UK households, more people are turning to side hustles for extra income. But beware—HMRC is tightening its grip.

Sweeping new tax regulations are set to kick in from January 2024, giving HMRC automatic access to data from many different digital platforms like eBay, Uber, and Airbnb. 

According to a recent survey conducted by, nearly half of the UK population—44% to be precise—engaged in at least one side hustle in 2023. 

They also found that the typical person in the UK makes an additional £206 weekly through their side jobs, amounting to an extra annual income of £10,701.

So you can see why HMRC wants its share.

Whether you're a delivery driver, an online seller, or a holiday home host, these changes could have serious tax implications for you. Which could result in ending up on the wrong side of the taxman, and paying tax penalties, if you’re not careful. 

Read on to understand the ins and outs of the upcoming legislative changes, and how to ensure you're not caught out.

What Exactly Are the New Data Access Rules?

Starting January 2024, HMRC is rolling out new regulations designed to crack down on tax evasion related to side hustles. These rules align the UK with the Organisation for Economic Co-operation and Development (OECD) guidelines, allowing HMRC to collect information about UK earners from digital platforms based abroad. 

Before this, HMRC could only request such data on an ad-hoc basis, but the new framework ensures automatic sharing of this information. 

The motivation behind these changes is twofold: to help individuals comply with their tax obligations and to catch those deliberately avoiding taxes. To facilitate this, HMRC will be sharing the collected information with tax authorities in other participating countries, expanding its investigative reach beyond domestic borders. 

HMRC has committed significant resources to enforce these new rules, allocating £36.69 million and employing 24 full-time staff to oversee their implementation. 

This initiative is part of HMRC's broader strategy to make it easier for people to pay the correct amount of tax and clamp down on tax evasion.

Who Will New Rules Affect and How Will They Affect Them?

The rules are poised to impact a wide array of people who generate additional income through ‘side hustles’. 

For example, individuals who operate small online shops selling handcrafted goods or vintage clothing will be directly affected. Similarly, those renting out their property on platforms like Airbnb or driving for ride-sharing services like Uber also fall under the purview of these changes.

One key point to highlight is the £1,000 "extra income" tax threshold, also known as the ‘Trading Allowance’. While it might seem like a safe-harbour, earning even a pound more than this allowance mandates a declaration to HMRC. 

Failure to do so could result in tax bills and penalties. 

The new rules require digital platforms to report income automatically to HMRC, making it much easier for tax authorities to identify non-compliance. 

Essentially, the room for error—or intentional oversight—has substantially narrowed, raising the bar on the need for vigilant tax reporting.

Seb Maley, the CEO of Crunch partner Qdos, a tax insurance firm for the self-employed, shared his insights with the Mirror, stating that,

"The crux of it is that HMRC doesn’t trust the growing number of people with side hustles in the UK to accurately report how much money they’re making this way – so the tax office will go directly to these platforms, who will become responsible for recording this information and handing it over to HMRC. HMRC will then compare it with the tax returns submitted by these people. If the numbers don’t add up, HMRC has everything it needs to launch a tax investigation."

How to Stay on the Right Side of HMRC’s New Reporting Rules

The best way by far to ensure you remain compliant with your tax responsibilities under the reach of HMRC’s new powers, is to use an accountant.

This is now more important than ever because accurately filing your self-assessment tax-return yourself is a highly error-prone task. And this extra reporting requirement will make it all the more complicated.  

Also, as we mentioned at the beginning, the fines for late payment and penalties for tax-evasion are pretty serious. They range from £1000 fines for minor offences and up to 5 years in jail for big-time tax fraud. 

And it doesn’t go unnoticed; in the fiscal year 2019/20, HMRC received a total of 73,000 reports of tax fraud.

Furthermore, as 75% of self-employed people and small businesses overpay tax, it’s wise to have a good accountant, like Crunch : ), do your Self Assessment for you and claim back every penny you’re owed. 

Here’s 3 ways we can help you navigate the new side-hustler crackdown safely:

1. If you’re a Sole Trader try our game-changing new product: CrunchONE. Its uniquely accessible, no subscription pricing model is perfect for side-hustlers on a budget.

And it features our award-winning software that simplifies tax, ensuring you seize every chance to cut costs and avoid penalties for tax mistakes. Plus you get access to support from Chartered Accountants and Self Assessment service included.

2.  Use Crunch Protect. Available as one of our fantastic add-ons for Crunch clients, Crunch Protect provides support from a tax expert who will handle an HMRC tax inquiry should you be subject to one. 

They’ll defend your case at every stage from start to finish against all-manner of possible inquiries. Having representation from an accountant has been shown to be far more likely to yield positive outcomes from tax-inquiries.

3. Try our Self Assessment service. Our expert accountants will complete your tax return for you and handle all the boring paperwork. To keep you tax efficient and free from any miscalculations, tax errors and missed filings. 

So you can rest assured that you’ll be safe from the wrath of HMRC. Which, as we say, is now especially important given the new rules and far reaching data access.

Stay Tax-Smart in 2024

If you've got a side hustle in the UK, it's time to pay close attention. HMRC is stepping up its game, and you don't want to be caught off guard. 

New rules kicking in from 2024 are going to make it much easier for the taxman to know exactly how much you're making from platforms like eBay, Uber, and Airbnb. This is a double-edged sword: on one hand, it's about everyone paying their fair share; on the other, it means you've got to be extra vigilant with your tax paperwork. 

Luckily, you don't have to go it alone. Now more than ever, it's a good idea to get some expert advice to make sure you're ticking all the boxes and claiming back what's rightfully yours. Trust us, a little help can go a long way in making sure you stay on the right side of these changes.

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If you're unsure what level of support you need, our friendly team are on hand to help you pick the right package for you.
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James Waller
Content Specialist
Updated on
October 27, 2023

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