The Retirement Newsletter: Changes to worldwide tax rules that may impact your side-hustle
Issue Number: -4 — looking at how tax changes could impact side-hustles
Welcome
Welcome to Issue -4, where I will look at possible tax changes impacting your side-hustle tax bill.
Yes, I know it isn’t an exciting topic, but there appear to be changes to the tax rules coming that could impact side-hustles, and these changes are worldwide, not just in the UK.
Side-hustles
If you have been following along with my newsletters, you will know that I have written quite a bit about side-hustles.
In the 139 issues (this week is the 140th) of the newsletter, I have written about fifteen ways you could make some extra cash in your retirement. These hustles have covered the following:
Reading — see Issue -92 of the newsletter where I looked at Reading as a side-hustle.
Exercise — see Issue -89 on Exercise as a side-hustle.
Writing — Writing as a side-hustle was discussed in issue -86.
YouTube and Photos — I first explored this in issue -84 — YouTube and Photos as a side-hustle.
Online Courses — see Issue -80: Online courses.
"Knitting" (without wool) — in Issue -76 — ”Knitting" (without wool) — I considered turning any hobby or pastime into a side-hustle.
Relaxing — Issue -73 looked at relaxing as a side-hustle.
Gardening — gardening as a side-hustle was covered in Issue -67 — Gardening.
Walking — Walking as a side-hustle was looked at in issue -60.
Being a couch potato — Issue -58 looked at Being a couch potato as a side-hustle.
Travel — turning a love of travel into a side-hustle was looked at in issue -47, Travel.
Do it yourself (DIY) — in issue -44, I asked if turning Do it yourself (DIY)skills into a side-hustle could bring in some extra income.
Photography — in Issue -39, I revisited Photography as a side-hustle.
Paid Newsletter — setting up a Paid Newsletter to bring in some money was explored in Issue -38.
Owning a dog — in issue -8.5, I looked at Owning a dog as a way to make some extra money.
I have also written about passive income in your retirement and the idea of evergreen income.
I do seem slightly obsessed with side-hustles, and that is because, if my maths is correct, I will need a little extra income to get me from retirement date to my UK state pension age. My private pension is good, but it could be better. Hence, I will need a side-hustle to help me.
Anyway, the changes coming in may impact taxpayers in the UK and could potentially impact taxpayers worldwide.
Side-hustles and tax
Please note that I am not a tax expert, and what I am writing about is based on my understanding of the tax situation in the UK. I could be entirely wrong about side-hustles and taxes. Please check the situation with your local tax office.
I have run various side-hustles for nearly 25 years, and none have made much money. During that time, I was a good citizen and paid my taxes on any income.
In the UK, we have two taxes on side-hustles — National Insurance and Income Tax. And, if you are doing your side hustle right, as I understand it (although things may have changed), if you are liable for UK tax, you should be registered with the UK government as self-employed (sole trader), even if you have a regular full-time job. You only pay the National Insurance tax levee if you are self-employed (sole trader).
I am registered and have been paying my National Insurance and Income Tax like a good boy.
Recently, the UK Government announced what appeared to be a new tax on side-hustles. From my understanding, it isn’t a new tax; they will get better at tracking tax cheats.
From the 1st of January 2025, websites and apps that make users money through renting or selling must report such earnings to His Majesty’s Revenue and Customs (HMRC) — the Tax Office. The first tax year to be covered will be 2023/24.
The data sharing will cover sites and systems based in the UK and worldwide.
The changes have occurred in the UK because the UK signed up to the Organisation for Economic Co-operation and Development rules, which aim to tackle tax evasion. However, your earnings will only be reported to HMRC if the country where the websites and apps pay tax is also signed up to the Organisation for Economic Co-operation and Development rules. Likewise, if you are not a UK resident but are making money online via a UK company that pays tax in the UK, your earnings may be reported back to your local tax office if your home country is also signed up.
From my understanding, if you sell your old stuff on eBay, etc., there are no tax issues unless your sales are over £1,700 or more than 30 items, at which point you could be viewed as a trader. When you hit £1,700 or more than 30 sales, the selling platform (eBay, AirBnB, etc.) must tell HMRC.
Interestingly, these sales are per platform, so you might not be reported if you never make more than £1,700 or more than 30 sales on a given platform.
One final ’sting’ is that even though there is a £1,700 limit, if you sell more than £1,000 in the UK and pay tax in the UK, you may have to pay tax on that income.
So, effectively, what has changed is not the tax system but the HMRC’s ability to track your online earnings. The tax situation hasn’t changed. If you were liable for tax on your side-hustle in the past, you are liable now. And, if you weren’t paying the tax you owed on your side-hustle in the past, the HMRC (or the tax office in your home country — if they are signed up) now have a new tool to come after you. Be warned!
Please note that I am not a tax expert, and what I am writing about is based on my understanding of the tax situation in the UK. I could be entirely wrong about side-hustles and taxes. Please check the situation with your local tax office.
Travel — Nostalgia Corner
This week, I hit a milestone with my travel blog over at Medium — I finished transferring my 664 travel stories from my old hacked WordPress site to Nick’s Wanderings. This transfer meant I published a story on Medium every day for 664 days. It feels odd to have finally finished the transfer.
This week, tales from the start of my ‘world tour’ of Southeast Asia.
Malaysia — Kuala Lumpur International Airport (KUL) — Domestic Terminal — My tour started with a flight from Kuala Lumpur International Airport (KUL) to Langkawi International Airport (LGK).
Malaysia — Langkawi International Airport (LGK), Malaysia — Weirdness at Langkawi International Airport (LGK), Malaysia. The first thing I saw at Langkawi International Airport was odd and something I had not expected to see in Malaysia.
Malaysia — The Andaman Hotel, Langkawi, Malaysia — The Andaman Hotel was my base for a few days. It was nice and relaxing, but I had to watch out for the monkeys.
Malaysia — The Beach, Andaman Hotel, Langkawi, Malaysia — A stunning beach.
Malaysia — Tg Rhu Mangrove Tour, Langkawi, Malaysia — A tour of the local mangrove swamp. There were so many snakes! And some very cute monkeys (an example is in the photo at the top of this newsletter).
Malaysia — Nature Walk — The Andaman Hotel, Langkawi, Malaysia — Taking a closer look at the plants and animals around the hotel and my first encounter with a Flying Lemur (Cynocephalus variegatus).
Malaysia — Next stop — Cameron Highlands, Malaysia — The Cameron what?
Next week, I start to explore the Cameron Highlands.
Useful links
UK Government Website:
Next week
Next week, in issue -3.5, I reflect on entering the home stretch to my retirement. It is all beginning to feel a little bit weird.
Thanks
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Until next time,
Nick
PS, If you want to contribute something to the newsletter — a story, advice, anything — please get in touch.
Please note: I am not a financial advisor or a tax expert. When I write about money and financial matters, I base my opinions on what I have read over the years about money, tax and retirement preparation. THIS IS NOT FINANCIAL OR TAX ADVICE.