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Article by GoSimpleTax

A government proposal to increase the Self Assessment tax return threshold for traders from £1,000 to £3,000 before the end of this parliament (2029) would mean 300,000 people (98% of them self-employed) no longer having to file a tax return.  

An estimated 90,000 would also have no tax to pay and many side-hustlers will be among them. It’s great news for those who operate a side hustle, whether selling on Vinted or eBay, running a dropshipping business, selling handmade items, Uber driving, dog walking, teaching or other part-time business.

Side hustle growth

Currently, if your annual gross trading income (ie total amount you earned by trading without deducting any expenses) is more than £1,000, you must register for Self Assessment (if you’re not already registered) and file a Self Assessment tax return each year. But this could end for almost a third of a million people.

The government says it wants to make the change to free up time for taxpayers, so they can get on with running and growing their business, as it seeks to “transform HMRC into a quicker, fairer and more modern body”. However, that doesn’t mean that they won’t have to pay any tax. About 210,000 would, but they would do so via a new simple online service, although no details have yet been revealed.

According to James Murray, Ealing North MP and Exchequer Secretary to the Treasury: “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.”

Reality check

So, although the proposal is to increase the tax reporting threshold to £3,000, the £1,000 tax-free trading allowance won’t change. That means:

• If your gross annual trading income is below £1,000 – no tax is payable and you don’t need to report it to HMRC. You also get your Personal Allowance (currently £12,570 for the 2025/26 tax year), so you only pay Income Tax on gross income of £13,570. This won’t change.

• If your gross annual trading income is £1,000-£3,000, once the changes are introduced, Income Tax may still be payable, but you can report your income using the new simplified online service, without having to complete a tax return.

• If your gross annual trading income is more than £3,000, following the planned changes, you’ll still have to register for Self Assessment, complete a tax return and pay any taxes due.

Need to know! Current reporting rules remain the same and will only change if the proposals are introduced.

Welcome change?

Eve Williams, CEO of eBay UK, reacted favourably to the proposed change to the Self Assessment tax return threshold, saying: “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. By removing the paperwork associated with selling online, hopefully, we will help these side hustles grow into fully fledged small businesses.”

Reaction was rather more lukewarm from self-employment association IPSE. It said: “If the new service allows simple incomes to be reported in a few clicks, this will undoubtedly make the process of reporting easier for the estimated 210,000 that are expected to be eligible. But decoupling the thresholds for reporting and paying tax on small incomes has the potential to create confusion. Moreover, it’s a missed opportunity to lift both thresholds together, as organisations like IPSE have campaigned for, which would give side-hustlers an even bigger boost.”

Improving customer service

The government is also looking into ways to improve HMRC’s customer service. Murray and senior HMRC officials have had meetings with NatWest, Octopus Energy, Barclays, John Lewis, Centrica and other large firms to “learn best practice and innovative approaches to modernising and digitising customer service”. Use of generative AI and test and learn approaches to improving customer service are part of this. Reportedly,

HMRC is also trialling the use of AI to point taxpayers to tax information they need on government website GOV.UK. HMRC has also started to trial a new system that enables taxpayers to use their voice as their password, allowing them to “pass security checks faster and more securely”. The system could soon be rolled out if the trial proves successful, says the government.

About GoSimpleTax

Income, Expenses and tax submission all in one.

GoSimpleTax will provide you with tips that could save you money on allowances and expenses you might have missed.

The software submits directly to HMRC and is the solution for freelancers, the self-employed, sole traders and anyone with income outside of PAYE to file their self-assessment giving hints and tips on savings along the way.

Get started with GoSimpleTax today, it’s free to try.

Article by PolicyBee

Find out everything you need to know about your legal duty to protect your staff with this at-a-glance employers’ liability insurance guide.

What is employers’ liability insurance?

Employers’ liability insurance (EL) protects you against claims made by your employees for injuries and illnesses they suffer at work. It pays any compensation you’re liable for and your legal defence costs, too.

It’s especially important because it’s the only business insurance required by law. It’s also our third most-requested type of cover after professional indemnity insurance and public liability.

Who needs employers’ liability insurance?

It’s safe to say most UK businesses probably need EL. That’s because the policy wording uses such a broad definition of what constitutes an ‘employee’.

To make sure as many people as possible are covered, ‘employee’ is taken to have a much wider meaning than just a permanent member of staff employed under contract. They don’t even have to be paid.

Part-timers, volunteers, work experience kids, secondees, temps, helpers, apprentices, staff borrowed by you and labour-only subcontractors under your supervision are all classed as ’employees’. So don’t fall into the easy trap of thinking that because they’re not really ‘your’ staff, they’re also not your responsibility. They are – and so is their welfare.

In fact, apart from publicly funded organisations, the only businesses that don’t need employers’ liability insurance are:

• Companies where the owner is the sole employee, owning 50% or more of the issued share capital.
• Family businesses not incorporated as limited companies where all employees are closely related to the business owner (for example father, son, brother, sister, husband, wife etc).

How much employers’ liability cover do I need?

By law, £5m is the minimum amount required for most businesses. However, you’ll find most insurers offer £10m as standard, which at least makes choosing your level of cover straightforward.

That figure reflects just how costly claims for staff injury and illness can be. Even a claim for back problems sustained by sitting for long periods in an unergonomic office chair can run to the £thousands. And serious accidents and injuries inevitably demand much more.

What happens if I don’t have it?

The Health and Safety Executive (HSE) enforces the law on employers’ liability. If a health and safety officer comes knocking, you could be fined £2,500 for every day you should’ve had cover but didn’t, and £1,000 for not displaying your insurance certificate. Gulp.

In fairness, it’s likely you’ll be given a few days’ grace to sort out a policy rather than fined there and then. But it’s best not to chance it.

Anything else I need to know?

When you get your policy documents from your insurer or broker, stick your employers’ liability certificate in an obvious spot on a suitable wall – somewhere everyone can see it. That’s because you’re legally obliged to have it in a place others can easily read it.

And if you don’t have a wall, you can store your certificate electronically. Just make sure your guys know how to access it if they want to.

Not sure if any of this applies to you?

If you want EL advice straight from the horse’s mouth, the HSE have put together a handy employers’ liability insurance guide. It’s everything you need to know about employers’ liability in one document.

If that doesn’t cover it, there’s more info on our employers’ liability page, or feel free to give us a call on 0345 222 5391. We’re happy to talk you through it.

Need small business insurance that fits your needs? PolicyBee offers the cover you’re looking for — get a quote today.

Article By Coconut

Making Tax Digital for Income Tax – you’ve heard of it, right? You know how it will impact you, when it’s being introduced and how it will change things? You may even have received a letter from HMRC telling you about it. None of that rings any bells?

Well, although the clock is ticking and the first phase of the introduction of MTD for Income Tax isn’t too far off now, there’s still more than enough time to get ready. And the sooner you do that, the better placed you’ll be to limit the impact of the significant changes that MTD for Income Tax will bring. So, what six steps should you take?  

1) Find out when MTD for Income Tax will affect you

• Sole traders/landlords with a gross trading/rental income of £50,000+ must comply with MTD for Income Tax requirements from 6 April 2026.

• Gross trading/rental income means all trading/rental income before any tax expenses (ie associated costs) are deducted.

• Sole traders and landlords with a gross trading/rental income of £30,000-£50,000 will be next affected, from 6 April 2027. Then those with a gross trading/rental income of £20,000-£30,000 must comply from 6 April 2028.

• Those with annual gross trading/property income of £20,000 or less are not currently in the scope of MTD and HMRC has not yet announced when they will be.

• If necessary, work out your gross trading/rental income, so that you’re clear about when MTD for Income Tax will affect you.

2) Find out about new MTD for Income Tax recording and reporting requirements

• When you are affected by MTD for Income Tax, you’ll need to keep accurate digital accounting records, which you’ll need to update fully at least every quarter. That means ensuring that all income and tax expenses are recorded in digital records (ie accounting software).

• You will not be able to keep paper accounting records, you will either have to use MTD for Income Tax-compliant accounting software or “bridging software”, which will enable you to report figures to HMRC if you would prefer to use spreadsheets to keep your sole trader or landlord financial records.

• Under MTD, you’ll need to digitally report your income and expenses to HMRC every quarter. If you get MTD-compatible accounting software, this will be very easy, but you’ll need to ensure that your records are accurate and updated regularly.

• After you send your fourth quarterly summary to HMRC via the software, final adjustments can be made and your updated tax bill estimate will be shown. If you receive other taxable income and have other tax expenses, you will need to provide HMRC with summaries of these.

• A final annual declaration can then be made via the MTD-compliant software, confirming that the figures you’ve provided previously are accurate. HMRC will then give you a final tax bill for the year.

3) Learn the quarterly reporting deadlines

Basically, you have a month after the quarterly period end date to send your quarterly update digitally. Corrections and adjustments to previous updates can be made in your next update.

• Quarterly update 1: 6 April to 5 July – Filing deadline: 7 August

• Quarterly update 2: 6 April to 5 October – Filing deadline: 7 November

• Quarterly update 3: 6 April to 5 January – Filing deadline: 7 February

• Quarterly update 4: 6 April to 5 April – Filing deadline: 7 May

4. Choose MTD-compatible accounting software

• To comply with MTD for Income Tax quarterly digital reporting requirements you’re going to need the right accounting software.

• HMRC is not making available its own MTD for Income Tax software, but the HMRC pages of the government’s GOV.UK website provides guidance on choosing MTD-compliant software, as well as some third-party MTD-compliant software options that are already available.

• While some software will be able to report all taxable income sources, others may be suitable for only one (eg rental income). If you need to report different types of taxable income, for example, if you’re a sole trader who also earns income from renting out property, you need to make sure that your software can report all taxable income digitally to HMRC.

• If you’re already using accounting software, find out from your software provider whether it is fully MTD for Income Tax compliant. You should also check with the software provider that your chosen product suits your specific needs.

5) Get used to regularly using your accounting software

• You don’t have to become an accounting software expert, you just need some basic knowledge that enables you to make sure that your income and expenses are regularly entered into your digital records. Accounting software is remarkably easy to use and benefit from.

• It’s really simple and quick to connect your business bank account to your accounting software, so that your income is automatically entered. It’s less straightforward if you use your personal bank account for sole trader or landlord income/expenses (the solution is to open a separate business bank account). Ditto if you accept cash payments or use cash to buy things for your business (using a card for all purchases gets you around this).

• If you’re still using paper records, make the transition now, so you have enough time to learn the ropes, which shouldn’t take very long. Software providers and accountants normally provide onboard training.

• Set aside time, whether each week or fortnight, to fully update your accounting software. Make this a habit. Stay on top of your figures, especially your expenses. Some accounting software allows you to use your phone to snap and store sales receipts for purchases. This will make quarterly reporting much easier.       

6) Talk to an accountant or bookkeeper

• They should be able to advise you on how to limit the impact of MTD for Income Tax. If you use an accountant regularly anyway, they’re likely to ensure that the software they get you to use is fully MTD for Income Tax-compliant. They’re also likely to provide some basic guidance on how to use it. Support from a good accountant or bookkeeper should make MTD compliance much simpler. 

• The whole point of Making Tax Digital is to make your life easier when it comes to managing your tax affairs, not more difficult. If you get the right accounting software solution, it should take care of much of the hard work for you. There really isn’t too much to worry about.  

About Coconut

Coconut is the easy way to sort your finances without the headache.

Built with sole traders in mind, it helps you track income, log expenses, and keep on top of your taxes – without piles of paperwork or confusing spreadsheets. Whether you’re on site or on the move, Coconut makes it simple to know what you’re earning, what you’re owed, and how much tax you need to set aside. Less faff, more graft.

Get started with Coconut today and take a 30 day free trial.

See just how easy it is here!