In this week’s Enews, we look at a change in the threshold for reporting trading income on side hustles. There is also news on the Spring Statement and the Stamp Duty deadline to update you on.
News - 14 March
Side hustle trading threshold raised to £3,000 per year
The reporting threshold for trading income for self assessment is being lifted from £1,000 to £3,000 gross within this parliament, according to the Treasury.
This includes people trading clothes online, dog-walking or gardening on the side, driving a taxi, or creating content online.
The Treasury says this will benefit around 300,000 taxpayers who will no longer need to file a self assessment tax return.
An estimated 90,000 of them will have no tax to pay and no reason to report their trading income to HMRC in the future at all. Others will be able to pay any tax they owe through a new simple online service.
The changes are part of the government’s Plan for Change, which it says will drive forward efficiency reform.
James Murray, Exchequer Secretary to the Treasury, said:
‘From trading old games to creating content on social media, we are changing the way HMRC works to make it easier for Brits to make the very most of their entrepreneurial spirit.
‘Taking hundreds of thousands of people out of filing tax returns means less time filling out forms and more time for them to grow their side-hustle.
‘We are going further and faster to overhaul the way HMRC works to make sure it delivers the Plan for Change that will help put more money in people’s pockets.’
Internet link: GOV.UK
Chancellor has set herself a fiscal trap ahead of Spring Statement, warns IFS
Chancellor Rachel Reeves has set herself a trap with self-imposed fiscal rules that could force her into tax hikes and deeper spending cuts as the economy deteriorates, the Institute for Fiscal Studies (IFS) has warned.
The Chancellor’s rules around borrowing have left Britain’s economic policy ‘entirely exposed’ to global changes and could force her into major tax and spending decisions at this month’s Spring Statement, previously billed as a non-event, the IFS said.
The Treasury has committed to delivering only one major fiscal event a year but the prospect of missing her own targets at the first hurdle could see Ms Reeves intervene earlier, it added.
Matthew Oulton, Research Economist at IFS, said:
‘Rachel Reeves has engineered a trap for herself, albeit in difficult circumstances. Aiming to meet inflexible, pass–fail fiscal targets by the slimmest of margins was a risky strategy from the outset.
‘It was always possible that economic conditions would deteriorate, put her on track to miss those rules, and push her into making tax and spending changes at what isn’t supposed to be a fiscal event later this month.
‘This scenario is far from guaranteed and she could still get lucky. But if not, she will have to choose between her fiscal rules and her commitment to holding only one fiscal event per year.’
Internet link: IFS website
25,000 first-time buyers set to miss stamp duty deadline
25,000 first-time buyers are predicted to miss the 31 March stamp duty deadline, according to property website Rightmove.
This is based on homes priced up to £625,000, which is the current maximum stamp duty threshold to be considered a first-time buyer.
In total, an estimated nearly 74,000 home-movers in England are currently going through the legal completion process and will just miss the deadline and complete in April.
The net effect for this group, who are set to complete just one month later, is a collective £142 million in additional stamp duty tax, compared with what they would have paid if they’d been able to complete in March. For first-time buyers, it is a total of £34 million extra in costs.
Rightmove’s Property Market Expert Colleen Babcock said:
‘We expect a rush to complete close to 31 March as first-time buyers and home-movers try to avoid paying extra in tax. Our numbers show how there is a relatively small, but disproportionately impacted group of first-time buyers who will be caught out by the changing thresholds, highlighting some disparities in the way the current system works.
‘We think it would make sense to grant a short extension to the deadline and help these movers, rather than have them face higher charges when they complete later in April.’
Internet link: Rightmove website
