The government says it is making it easier for online sellers, drivers, and dog walkers by raising a key threshold
A significant tax overhaul is set to benefit hundreds of thousands of side hustlers, including Vinted sellers, drivers, and dog walkers, by freeing them from the burden of filing tax returns. The government’s initiative aims to reduce bureaucracy and support those managing additional income streams alongside full-time employment.
The primary change involves raising the Income Tax Self Assessment (ITSA) reporting threshold for trading income from £1,000 to £3,000. This means that many self-employed individuals, ranging from online sellers to freelance content creators, will no longer have to endure the inconvenience of submitting self-assessment tax returns.
Approximately 300,000 people will be impacted by the reform, with around 90,000 of them not owing any tax at all, thus eliminating the need to report their earnings. The side hustle economy has flourished in recent years, particularly during the pandemic, as more individuals sought alternative income sources.
Platforms such as Vinted, eBay, and Depop have seen a surge in popularity as consumers gravitate towards second-hand shopping. For those who still need to pay, a new “simple online service” will simplify payment management, says the government.
Treasury Minister James Murray hailed the change as a triumph for Britain’s burgeoning number of side hustlers. He said: “From selling second-hand clothes to streaming content online, we are transforming HMRC to help hardworking Brits make the very most of their entrepreneurial spirit. Taking hundreds of thousands out of the tax return process means less paperwork and more time to grow their business.”
The announcement came as part of a speech marking 20 years of His Majesty’s Revenue and Customs (HMRC). Murray also promised improvements to HMRC’s customer service, a long-standing source of frustration for taxpayers, and revealed a plan to ease import restrictions on fine art and antiques under a new scheme.
The changes are part of a broader initiative to modernise HMRC and make it “quicker, fairer, and more modern.” A pilot programme with US customs is also in the works to streamline trade processes between UK and US businesses.
Additionally, the government is introducing a new tax fraud whistleblower scheme inspired by successful models in the US and Canada. Under this system, those who report serious tax fraud could receive financial rewards based on the recovered tax revenue.
Murray emphasised: “We are moving faster to overhaul HMRC and ensure it supports small businesses while cracking down on tax fraud. These reforms will put more money in people’s pockets and ensure that everyone plays by the rules.”
Other measures announced in Murray’s speech include tougher enforcement on corporate tax fraud, closing loopholes in company registrations, and increasing compliance checks on rogue directors. To modernise operations, HMRC is testing AI-driven customer support to improve taxpayer assistance.
As the first minister to sit on HMRC’s board, Murray has worked with private sector giants like NatWest, Octopus Energy, and John Lewis to explore ways to improve efficiency and customer service. With these sweeping changes, the government aims to reduce bureaucracy for small-time entrepreneurs while ensuring large-scale tax fraud is tackled more aggressively.
