HMRC: 300,000 side-hustlers freed from tax returns

Up to 300,000 self-employed workers and side-hustlers will no longer need to file a Self-Assessment tax return under new government reforms announced today.

In a speech marking HMRC’s 20th anniversary, tax minister James Murray outlined plans to raise the trading income reporting threshold from £1,000 to £3,000. The change, expected within this parliament, will ease the tax burden on those with small-scale earnings, such as online sellers, taxi drivers, dog walkers, and content creators.

The government estimates that around 90,000 people will have no tax to pay at all, while others will be able to settle their liabilities via a simplified online system. Mr Murray described the move as part of a wider strategy to modernise HMRC and reduce administrative pressures on taxpayers.

“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,” he said.

The changes have been welcomed by industry leaders. Eve Williams, CEO of eBay UK, said: “This will be welcome news for thousands of UK sellers for whom eBay is a side hustle and a means of supplementing their household income during challenging times.”

Alongside the tax threshold increase, Mr Murray announced further measures aimed at streamlining customs procedures. The government plans to simplify the Temporary Admission system for imported fine art and antiques, extending the usual duty-free period from two to four years. A digital pilot with the United States will also be launched to improve trade processes through real-time data sharing.

Further updates were provided on HMRC’s efforts to combat tax avoidance, including tackling phoenixism—where company directors dissolve businesses to evade tax. The government will introduce new requirements for upfront tax payments from certain new companies and expand personal liability for rogue directors. A new informant reward scheme, inspired by similar initiatives in the US and Canada, will offer financial incentives to those who report significant tax fraud.

Meanwhile, HMRC continues its push to modernise services, trialling AI-driven assistance and voice biometrics for customer authentication. It recently met its target of handling 85% of calls between October and December 2024 and expects to meet its service standards for 2025-26.

Ellen Milner, Director of Public Policy at the Chartered Institute of Taxation, welcomed the focus on simplification, saying: “A more straightforward, easy-to-navigate tax system could free up business owners and managers to focus on growing their businesses.”

With these changes, the government aims to create a more efficient tax system, supporting economic growth while ensuring fair revenue collection. Further details on the new tax policies are expected in the coming months.