There is an online tool available on GOV.UK that allows taxpayers to check if they need to advise HMRC about additional income they receive. The online tool can be found at https://www.tax.service.gov.uk/guidance/check-non-paye-income/start/how-did-you-receive-additional-income
Additional income could be generated by:
- selling things, for example at car boot sales or auctions, or online;
- doing casual jobs such as gardening, food delivery or babysitting;
- charging other people for using your equipment or tools;
- renting out property or part of your home, including for holidays (for example, through an agency or online); or
- creating content online, for example on social media.
In most cases, these types of income are taxable. However, there are two separate annual £1,000 tax allowances available for property and trading income. If you receive either type of income listed (property or trading income), you can claim a £1,000 allowance for each. The online tool will help determine if this applies to you.
Where each respective allowance covers all the individual’s relevant income (before expenses) the income is tax-free and does not have to be declared. Taxpayers with higher amounts of income will have the choice, when calculating their taxable profits, of deducting the allowance from their receipts, instead of deducting the actual allowable expenses.