One-week warning for anyone with a side hustle to act to avoid £100 fine

IF you earned more than £1,000 in the last tax year from your side hustles, you need to register for self-assessment.

If you miss the October 5 deadline for registration and then fail to send in a tax return on time, you’ll likely face a fine.

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A side-hustle is something you do to earn extra income, such as selling things online, doing freelance work alongside your normal job, or making money from tasks like pet-sitting, dog walking, or babysitting.

How much you earn is important. If you make less than £1000 in a tax year from your hustle, it doesn’t count as taxable income, and you don’t have to declare it.

But, once you start making more than this, you need to register as self-employed and start paying tax on the money earned over this amount.

The threshold is based on your profit after deductible expenses. For instance, if you were making and selling jewellery, you can deduct the money you spent buying materials from how much you earned in total.

You only need to file and pay tax if your remaining profits are more than £1,000 for the year.

You also need to register if any of the following applied in the past year:

• you were a sole trader
• you were a partner in a business partnership
• you had a total taxable income of more than £150,000
• you had to pay Capital Gains Tax when you sold or ‘disposed of’ something that increased in value
• you had to pay the High Income Child Benefit Charge

You might also need to register and send in a tax return if you have untaxed income, such as:

• money from renting out a property
• tips and commission
• income from savings, investments and dividends
• foreign income

And there are some scenarios where you don’t need to send in a return, but might choose to anyway. For instance, if you want to:

• claim some Income Tax reliefs
• prove you’re self-employed, for example to claim Tax-Free Childcare or Maternity Allowance
• pay voluntary National Insurance contributions

You can check if you need to do self-assessment with the Government’s online tool.

The deadline for registering is October 5. There’s no penalty for registering after this, but if you haven’t signed up, filed your tax return, and paid your bill by January 31 you will be fined.

If you do miss the October 5 deadline, you should sign up as soon as possible. This means you’ll be set up and able to file your return in time.

There are two key deadlines for actually submitting the return. If you want to file a paper return, it needs to be in by October 31. If you’re submitting online, you have until January 31.

If you miss the deadline for filing, you face an immediate £100 fine. If your return is more than three months late, you’ll then have to pay an additional £10 a day for a maximum of 90 days.

If you’re more than six months late, you pay a fine worth 5% of your total tax bill – or £300, whichever is higher – and then if you’re 12 months late you’ll have another fine worth the higher of 5% or £300.

You also need to pay everything you owe by January 31, or you’ll also face a late payment fine.

If you’re more than 30 days late, you need to pay 5% of the tax due as a fine.

If you’re six months late you pay another fine worth 5% of the tax outstanding and then the same again at 12 months.

HMRC charge interest on late tax payments. The interest is charged from the date the payment became due until the date of payment and is added automatically.

There is a helpful calculator on the gov.uk website that you can use to calculate what your late payment fees will be, if you miss the deadline.

You can challenge any penalties if you have a reasonable excuse. You usually have 30 days from the date your penalty was issued to contact HMRC or make an appeal. If you miss the deadline, you’ll need to give a reason.

The taxman says examples of reasonable excuses include:

• your partner or another close relative died shortly before the tax return or payment deadline
• you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
• you had a serious or life-threatening illness
• your computer or software failed while you were preparing your online return
• issues with HM Revenue and Customs (HMRC) online services
• a fire, flood or theft prevented you from completing your tax return
• postal delays that you could not have predicted
• delays related to a disability or mental illness you have
• you were unaware of or misunderstood your legal obligation
• you relied on someone else to send your return, and they did not

Whatever the reason, you must send your return or payment as soon as you can.