As the cost of living continues to rise, Gen Z has turned to side hustles to generate extra income. Platforms like Depop, Vinted, and eBay have become hotspots for reselling and entrepreneurship. However, as of January 1, 2024, these earnings may no longer go unnoticed by the taxman.
The U.K.’s HM Revenue & Customs (HMRC) has introduced new regulations requiring online platforms to report user earnings exceeding £1,000 annually. This applies to everything from selling second-hand clothes to renting rooms on platforms like Airbnb.
Previously, HMRC could request specific information from online platforms on a case-by-case basis. The new rules mandate uniform reporting, with platforms required to disclose user income by January 2025.
“These new rules will support our work to help online sellers get their tax right the first time. They will also help us detect deliberate noncompliance, ensuring a level playing field for all taxpayers,” an HMRC spokesperson explained.
For Gen Z, side hustles have become essential sources of income. While many sellers may not meet the £1,000 threshold, HMRC encourages everyone to use its self-assessment tool to ensure compliance.
Vinted’s CEO, Adam Jay, highlighted that only a small proportion of users will be affected. “It’s actually quite a small proportion of users of our platform who will trigger this threshold,” Jay said. “It’s only those making a profit from selling second-hand items who might be eligible for tax, depending on their personal tax situation.”
Under the new regulations, platforms will collect and report personal details about sellers, including their earnings and any fees charged. These rules align with international efforts led by the Organisation for Economic Cooperation and Development (OECD) to combat tax evasion.
Dawn Register, head of tax dispute resolution at BDO, emphasised the importance of accurate reporting. “The information provided to HMRC should make it easier to detect those who are either mistakenly not declaring income or deliberately evading tax,” she explained.
Sellers who already pay taxes on their earnings won’t need to provide additional information, ensuring the process remains straightforward for compliant users.
This change marks a significant shift for online marketplaces, where transparency and accountability will now take centre stage. For Gen Z and other online sellers, understanding and adhering to these new tax regulations will be essential to maintaining their side hustles.
Gen Z, also known as Generation Z, refers to the demographic cohort born approximately between 1997 and 2012 (though exact dates may vary slightly depending on the source). This generation follows Millennials (Generation Y) and precedes Generation Alpha.
Digital Natives
Gen Z grew up with the internet, smartphones, and social media as integral parts of their lives. They are often called “digital natives” because they have never known a world without technology.
Socially Conscious
They tend to be highly aware of social, environmental, and political issues, often advocating for change in areas like climate action, equality, and mental health awareness.
Diverse and Inclusive
Gen Z is the most ethnically and culturally diverse generation to date, and they value inclusivity and representation across all areas of life.
Entrepreneurial and Independent
Many members of Gen Z are entrepreneurial, exploring side hustles, freelancing, and self-employment as alternative career paths.
Education and Career Focused
While they value education, Gen Z also seeks practical skills and experiences. They often prioritise job stability, personal growth, and work-life balance over traditional career norms.
Financially Cautious
Having grown up during or in the aftermath of the 2008 financial crisis, Gen Z tends to be more financially cautious than Millennials, with a focus on saving and making informed spending decisions.
Gen Z is doing their part to shape the future in significant ways, influencing industries, culture, and societal norms with their unique perspectives and priorities.
