Why SMEs shouldn’t fear HMRC’s new mandate around side hustles

Leanne Rothwell, CEO of Not On The High Street, gives her view on why small businesses should not fear HMRC’s ‘new’ mandates around side hustles and explains the advantages of joining a digital retail platform to scale your business.

Earlier this year, HMRC announced a new mandate around the ‘side hustle’ tax which attracted a lot of media attention. Having officially gone into recession as a nation, sensationalist headlines like this can be hugely unsettling for small businesses, with business owners worrying about whether paying a ‘new’ tax might tip the balance for them financially.

As someone who has long been an avid supporter of small businesses, I found the misleading headlines to be concerning and I’d like to reassure small business owners that as far as they are concerned, nothing has changed. The ‘side hustle’ tax is not a new development and there are no new tax requirements for individuals who sell items on digital platforms like ours. To be 100% clear, the amount of tax paid on side hustle earnings and when it needs to be paid hasn’t changed under the new rules – the rules are there to ensure that digital retail platforms are now collecting and reporting effectively to HMRC.

As a reminder of the existing rules in place, if a person’s total income from trading or providing services online was less than £1,000 before deducting expenses in any tax year, they will not be required to inform HMRC of their side hustle income and won’t pay any tax on the profits. However, if a small business owner were to earn over this threshold, it’s likely that they would need to complete a tax return and if unsure, it is worth speaking to a solicitor or qualified professional for advice.

The crux of the HMRC announcement centres around digital retail platforms, like ours, which are now required to collect and report information about seller transactions and income to HMRC. Digital retail platforms must report sellers’ income by January 2025, one year after the rule change.

For me personally, the media attention on this issue once again highlighted how challenging being a small business owner can be. Not only do they need to focus on their craft and doing what they love, they also have to become a business expert, keeping on top of changes to regulation and making sure they don’t fall foul of any rules or requirements. This is true for many of our Partners (we don’t refer to them as sellers because they mean far more to us than that).

One way that small businesses can navigate this and continue focusing on their passion whilst expanding their network is by joining a digital platform such as ours. By becoming a Not On The High Street Partner they have access to a huge customer base - over 4 million potential buyers. We also offer business owners the opportunity to gain more exposure as their business grows and our Partners have the opportunity to be showcased in our marketing communications and advertisements.

I have been at Not On The High Street for twelve years, joining as an Account Manager and now running the business as CEO. What has been absolutely central to all of my roles here is the supportive approach to small businesses. The mission of our two female founders was to give opportunities to diverse and creative small businesses and our deep-rooted understanding of what they need to flourish is fundamental to what we offer.

Alongside my role as CEO at Not On The High Street, I am also a member of the IMRG Retail Advisory Board and Advisor to Stress Matters, a female-founded mission-driven organisation to support workplace wellbeing. My involvement in both of these areas has further reinforced my understanding of the many challenges faced by small business owners. That’s why we start caring for our Partners and prospective Partners from the moment they apply to sell on our platform, as we see ourselves as an extension of all the businesses that make up our marketplace. By way of example, during the onboarding process new Partners are given dedicated 1:1 set-up support with best practice advice and tips on having a successful store-front. This personalised customer service is something our Partners can always lean on, long after they have completed the onboarding process.

We also provide an around-the-clock Partner support system to help relieve the pressure small business owners often find themselves under and a holistic online Partner hub featuring expert business-orientated advice. The content is updated regularly by a dedicated team with resources ranging from considerations to have in mind when pricing products, to how to interpret consumer law. Another challenge new business owners often face is the fine margins that they have to struggle with during their formative years. One of the solutions we offer to help address this for our Partners is favourable rates on fulfilment, postage, packaging and services to support their business.

Aside from practical business advice we are also passionate about supporting our Partners’ creativity, allowing them to have the time to refresh designs, develop ideas and bring to life new ranges. This is where Spark comes in, our dedicated bespoke trend and range opportunity platform. It is a rich area for content, providing our Partners with information on trends that they can tap into to enhance their own business and keep growing. As an example, we hold regular webinars that are hosted by our in-house trend and curation experts on how to get the most out of the content to expand and develop product ranges. In fact, 24% of our Partners have less than 3 years of experience, which is a strong reflection of how we support and champion the best up-and-coming entrepreneurs.

It’s this personal touch that separates us from other digital retail platforms. In a field which is highly automated, the level of care and personal support we provide to our partners is unrivalled. We truly understand each and every one of the creative businesses that operate under our banner, which stems from the careful curation we undertake when selecting small businesses to join our community.

We currently have up to 5,000 applications to join our platform each year but only around 14% of those are accepted. The reason for this is because we want to ensure that our Partners aren’t having to compete with other small businesses who sell similar products and this gives our customers a truly unique and diverse selection of products to choose from. To this end, we are also committed to recruiting diverse and inclusive partners and we proactively contacted  a wealth of carefully selected minority-owned businesses in 2023 with an invitation to join the platform. We are proud to back solely British and Irish-based sellers and we are always on the hunt to bring in new, quality products to the Not On The High Street marketplace, which currently stands strong at around 6,000 trusted, unique creative businesses.