Side Hustles Under Scrutiny: Students and Gig Workers Face Tax Squeeze Amid Cost of Living Crisis
Students juggling studies with part-time gigs and individuals turning to side hustles to cope with soaring living costs are facing increased scrutiny from HMRC. New guidance issued to platforms like Airbnb, Uber, and Deliveroo outlines stringent reporting requirements on user earnings, set to be shared with the tax authority, HMRC.
The Model Reporting Rules, in effect since January 1st, aim to bridge the gap between reported income and actual earnings. HMRC will now have access to a detailed breakdown of gig workers’ activities, including earnings, bank details, and tax identifiers.
“HMRC is building a comprehensive picture of each self-employed worker’s activity,” warned Seb Maley, CEO of Qdos, a tax insurance provider. “Whether you’re renting a room, driving, or delivering, HMRC will soon know.”
University students watch out
This move is particularly concerning for university students who often rely on gig work to make ends meet. With tuition fees, rent, and everyday expenses rising, many turn to flexible platforms for additional income. However, navigating complex tax regulations while juggling academic commitments can be daunting.
“It’s crucial that those with side hustles ensure they’re on top of their tax affairs,” Maley stressed. “HMRC won’t hesitate to launch an investigation if they spot discrepancies.”
The cost of living crisis has forced many to seek alternative income streams, but the increased scrutiny on gig work highlights the challenges faced by those trying to navigate the complex landscape of self-employment and taxation.
While the new rules aim to ensure everyone pays their fair share, there’s a growing concern that they may disproportionately impact those already struggling to make ends meet. Experts are urging gig workers, especially students, to seek professional advice and ensure their tax affairs are in order to avoid potential penalties and investigations. Sometimes they need to contact the platform they are using or HMRC directly.
When do you need to fill and send in a tax return in the UK?
You must send a tax return if, in the last tax year (6 April to 5 April), any of the following applied:
- you were self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on)
- you were a partner in a business partnership
- you had a total taxable income of more than £150,000
- you had to pay Capital Gains Tax when you sold or ‘disposed of’ something that increased in value
- you had to pay the High Income Child Benefit Charge
You may also need to send a tax return if you have any untaxed income, such as:
- money from renting out a property
- tips and commission
- income from savings, investments and dividends
- foreign income
