Up to 300,000 people - including those with side hustles such as eBay, Air BnB and Vinted sales - will no longer need to file a Self-Assessment tax return, tax minister James Murray is expected to announce in a speech later today.
This could include people trading clothes online, dog-walking or gardening on the side, driving a taxi, or creating content online.
As part of HMRC changes, minister is expected to announce plans to increase the Income Tax Self Assessment (ITSA) reporting threshold for trading income, from £1,000 to £3,000 gross within this parliament.
This will benefit around 300,000 taxpayers. 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.
Mr Murray, the minister responsible for HMRC, will announce this reform to tax experts hosted by the Chartered Institute of Taxation and the Institute of Chartered Accountants in England and Wales in a speech to mark the 20th anniversary of HMRC.
He will also detail future simplifications to the government’s Temporary Admission customs procedure, to make this relief for temporary imports easier for a range of sectors to use, including art and antiques, often showcased in exhibitions across the UK.
A new digital pilot with the United States to test ways to speed up trade processes for U.S. and UK businesses is also expected to be announced.
Minister Murray will also update on the work HMRC is doing to tackle phoenixism – where company directors go insolvent to avoid tax – as well as announcing a new reward scheme to encourage informants to come forward to HMRC about tax fraud.
A boost for side hustles, eBay, Vinted and Air BnB
Exchequer Secretary to the Treasury, James Murray 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."
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The move has been broadly welcomed by businesses. Patricia McGirr, founder at Repossession Rescue Network says: "At last, a tax change that actually makes sense. Less pointless paperwork, more time for people to crack on with earning a living.
"This is great news for side hustlers, and a relief for HMRC staff no longer rummaging down the back of the fiscal sofa for pennies."
Pete Mugleston, Mortgage Advisor & Managing Director at Online Mortgage Advisor adds: "Raising the self-assessment threshold to £3,000 is a welcome move that will simplify tax reporting for thousands of side hustlers and small traders.
"Many people earning extra income from platforms like Vinted, Etsy,or part-time services will no longer face the administrative burden of filing a tax return, freeing up their time and HMRC’s resources."
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