In our day and age, money is an overriding priority in the average person’s life. Citizens from across the world have been struggling to make ends meet, with those living in the UK being no exception. As a result, the UK has seen a significant surge in side businesses. Now, they will be impacted, as the HMRC has issued an alert. A newly introduced procedure is not to be missed, as penalties will follow as a result. Find out today how this alert could potentially impact you and your side business.
The UK has seen a significant surge in side businesses
The UK has seen a surge in side businesses lately, which is a result of economic factors that make it difficult for people to rely on a single income. According to Morris Lane Chartered Accountants, the following economic factors have played a key role in this increase:
- Income stagnation
- Incomes are not rising at the same pace as the living costs
- Cost of living
- High inflation rates and increasing costs of essentials are resulting in an inability to save, higher expenses, and debt
The COVID-19 pandemic also normalised the concept of multiple income streams after the striking disruption and shift to remote work. As remote and flexible work models increased due to digital platforms that have provided accessible tools and marketplaces, more people had the time to create and engage in side businesses.
However, an HRMC alert could soon impact all side business owners, and those who fail to adhere to the alert could face some severe penalties.
The HRMC alert that could result in penalties
The HMRC has alerted Britons to see whether they must register for Self Assessment by a certain date. This is particularly crucial for Britons who are self-employed or who have made additional income from side businesses. The HMRC warned people to:
“Check if you need to register for #SelfAssessment for the first time by 5 October. You might need to if you: Have earned more than £1,000 through a side-hustle, are self-employed, [or] rent out a property. Find out more.”
The price comparison site, Finder.com, indicated that nearly 39% of the UK population has earned money through side businesses, with 49% of men reporting additional income and 37% of women earning an additional income. If you are unsure whether an additional income must be reported, such as the confirmed Nationwide payout of £175, then you are advised to check on the Gov.uk website.
These are the potential penalties
According to a report by BelfastLive, while no penalties were mentioned for if you should miss the deadline, failure to submit a tax return by the end of the following January will result in penalties. And remember, certain additional income is exempted from tax, such as gifts to family members that are exempted from Inheritance tax. However, there is some bad news for cohabiting families.
What’s more, financial experts have warned that side businesses may have to pay a striking amount of earnings to the taxman. Workplace salaries and income usually have tax deducted automatically through the pay-as-you-earn (PAYE) system. This is not the case with additional income, which is why an annual tax return must be submitted.
