If you receive income from an activity which is considered “Trading” then you may need to report it to HMRC.
💼 What is Trading?
Trade is defined by statute as including “any venture in the nature of trade”. To assess if you could be classed as trading, you will need to consider the Badges of Trade:
- 💰 Profit motive – the main indicator you may be trading is if you have an intention to make a profit, but by itself this is not conclusive
- Number of transactions
- Nature of the asset
- Similar trading transactions or interests
- Changes to an asset
- The way the sale was done
- Source of finance
- Time between purchase and sale
- Method of acquisition
You need to look at the overall impression gained from a review of all badges to determine if you are likely to be trading.
More information on the badges of trade can be found on HMRC’s website:
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20205
🕒 When Do I Need to Report?
- If your income from side hustles totals more than the Trading Allowance of £1,000 then you need to tell HMRC about it
- You will then need to fill in a self-assessment tax return and may need to pay tax
⚠️ NOTE: Online digital platforms such as eBay must now report all transactions to HMRC, so make sure you don’t get caught out!
HMRC have a handy online tool to check whether you need to tell them about your additional income:
If you have any questions, please contact us by email, phone or via LinkedIn messaging.