£1,000 to £3,000 Boost by HMRC: In a big win for people with side hustles and small businesses, the UK government is making it easier to earn extra money without the stress of filing a tax return. Tax Minister James Murray is set to announce that up to 300,000 people will no longer need to file Self-Assessment tax returns, thanks to a rise in the trading income reporting threshold from £1,000 to £3,000. This is part of a larger plan to modernise and simplify HMRC, helping taxpayers save time and focus on growing their income.
Who Will Benefit from the New Tax Reforms?
The new changes are great news for people earning money from small side jobs. This includes:
- Online sellers trading vintage clothes, handmade products, and other goods.
- Dog walkers, gardeners, and handymen doing part-time work.
- Taxi drivers and rideshare workers.
- Content creators earning from platforms like YouTube or TikTok.
With the increased threshold, anyone making up to £3,000 gross from side jobs won’t need to file a tax return. Out of the 300,000 people affected, 90,000 will have no tax to pay at all and won’t need to report this income in the future. Others will pay their taxes through a simple online service.
Key Takeaways:
- Easier access to tax relief on temporarily imported fine art and antiques often shown in galleries and exhibitions announced, boosting the sector’s international competitiveness.
- UK’s tax minister expected to announce these alongside a raft of other measures to help HMRC deliver Plan for Change through securing tax revenue and creating the conditions for growth in speech later today (11 March).
Why Is HMRC Making These Changes?
The main goal is to make tax simpler and fairer while supporting small earners and entrepreneurs. By cutting unnecessary paperwork, people can focus more on their work rather than worrying about taxes. According to James Murray, this move is part of a “Plan for Change” to create a modern, efficient tax system that grows with the economy.
Some other reasons behind these changes include:
- Freeing up HMRC resources to focus on bigger tax issues.
- Boosting economic growth by encouraging people to start or grow their side businesses.
- Reducing errors and improving customer service through automation and AI.
Other Big Changes Coming to HMRC
1. Improving Customer Service with AI and Voice Recognition
HMRC is learning from big companies like NatWest, Barclays, and John Lewis to modernise customer service. Some new tools they are testing include:
- Generative AI to guide people to the right advice on GOV.UK.
- Voice recognition login (Voice Biometrics) so users can pass security checks faster and more securely.
HMRC also plans to introduce a special team to handle long-standing Self-Assessment and PAYE issues, giving agents and taxpayers a clear path for help.
2. Cracking Down on Tax Cheats: Phoenixism and Informants
The government is getting serious about tax fraud. James Murray will talk about steps to stop phoenixism, where directors avoid paying company taxes by declaring bankruptcy and starting new companies.
There’s also a new reward scheme for informants — people who report serious tax cheats. Similar to systems in the US and Canada, this program could reward whistleblowers with a share of recovered taxes. The goal is to fight:
- Corporate tax avoidance.
- Offshore tax dodging.
- Tax fraud by wealthy individuals.
3. Making Trade Easier Between UK and US
A digital trade pilot project with the U.S. is also on the way to speed up customs processes. This aims to:
- Make UK-US trade quicker and more efficient.
- Use secure, real-time digital data.
- Help trusted traders get faster clearance and trade benefits.
With UK-U.S. goods trade worth £115bn, this move could hugely benefit businesses on both sides.
4. Relaxing Customs Rules for Temporary Imports
If you import items like art, antiques, or equipment temporarily, there’s good news! The time limit for keeping these items in the UK without paying duties will go from 2 to 4 years, making life easier for sectors like exhibitions and events.
What Experts Are Saying
- Ellen Milner, Chartered Institute of Taxation: “A simpler tax system helps businesses focus on growth instead of paperwork.”
- Eve Williams, CEO of eBay UK: “Great news for side hustlers. Less paperwork means more time to grow their businesses.”
The UK government’s latest reforms are set to free thousands of side hustlers from the burden of tax returns, helping them grow their earnings stress-free. The modernisation of HMRC, focus on customer service, and tough stance on tax fraud show a clear vision for a fairer, more efficient tax system. By cutting down on red tape and making smarter use of technology, the government hopes to boost economic growth and support small earners across the country.
FAQ
Who benefits from the new £3,000 HMRC threshold?
People earning extra money from side hustles, freelance work, and part-time gigs like online selling, content creation, or rideshare driving will benefit.
Do I need to file a tax return if I earn less than £3,000 from a side hustle?
No, if your total gross trading income is up to £3,000, you won’t need to file a Self-Assessment tax return under the new rules.
When will these new HMRC rules take effect?
The announcement is expected on 11 March, and details on when the changes take effect will follow shortly after.
What is phoenixism, and why is HMRC targeting it?
Phoenixism is when company directors shut down businesses to avoid tax and then restart under a new name. HMRC is cracking down on this practice to prevent tax fraud.
How will AI improve HMRC’s customer service?
HMRC plans to use AI and voice tech for faster and more accurate responses, including chatbots and voice-based login for secure access to tax accounts.
