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About 300,000 people in the UK with lucrative “side hustles” such as selling goods online will be freed from filing tax returns under government plans to treble the tax-free trading allowance from £1,000 to £3,000.
Under the current rules, anyone with additional income of up to £1,000 from side roles must file a self-assessment tax return.
By raising this level to £3,000, ministers hope to cut bureaucracy for the growing number of people who use businesses such as Vinted or Ebay to sell items online, as well as gig economy workers.
The pledge is part of a new package announced by the government aimed at boosting growth by transforming HM Revenue & Customs into a “quicker, fairer and more modern body”.
Ministers estimate that about 90,000 of the 300,000 people who will no longer have to report their trading income will have no additional tax to pay because of the changes.
James Murray, the Treasury minister who chairs HMRC’s board, said: “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.”
In a speech on Tuesday to mark the 20th anniversary of HMRC — formed in 2005 by merging the Inland Revenue and HM Customs and Excise — Murray also announced a pilot with the US customs office to speed up trade processes for UK and US businesses.
Other measures announced in the speech included a new scheme offering financial rewards to those who report serious tax fraud to HMRC.
The plan, inspired by successful whistleblower schemes in the US and Canada, aims to crack down on high-value tax crimes and tax avoidance by large corporations, wealthy individuals and offshore schemes.
HMRC already makes payments to whistleblowers who report tax fraud, but the payments are discretionary and not linked to the amount of tax recovered.
Under the new scheme, informants could take home a “significant” amount of compensation equal to a proportion of the tax take. Precise details about the exact percentage are yet to be set, though the government said the scheme is expected to produce more revenue than it costs.
Murray also announced plans to tackle rogue company directors by closing loopholes in company registrations and dissolutions and increasing compliance investigations.
Since taking his role on the HMRC board last year — the first time a minister has held the position — Murray said he has taken HMRC officials to meet private sector companies including NatWest, Octopus Energy, Barclays, John Lewis and Centrica to learn “best practice and innovative approaches” including modernising customer services, and the use of generative AI.
HMRC is trialling the use of generative AI to point taxpayers to advice on the government’s website, Murray added.
