Nearly 300,000 taxpayers could soon be free from the hassle of filing a tax return as the Government moves to raise the threshold for Income Tax Self Assessment.
The reform—set to take effect by 2029—is part of a broader push to modernise HMRC and ease the burden on individuals with lower trading incomes.
With the changes, a significant number of people will no longer need to report their earnings, sparking questions about who stands to benefit the most.
By 2029, the Government will raise the reporting threshold for trading income from £1,000 to £3,000, easing tax obligations for around 300,000 people across the UK.
Announcing the reform, James Murray, the Tax minister emphasised its role in transforming HMRC into a “quicker, fairer, and more modern body.”
Once the new threshold takes effect, an estimated 90,000 individuals will no longer need to report their trading income or pay tax on it at all.
By 2029, the Government will raise the reporting threshold for trading income from £1,000 to £3,00
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The move is designed to simplify tax reporting for those with modest additional earnings, particularly benefiting people with side hustles—such as online resellers, dog walkers, gardeners, taxi drivers, and social media content creators.
The reform is aimed at individuals who primarily pay tax through PAYE but earn extra income from small trading activities. It also benefits those whose sole income comes from modest trading earnings that fall below the tax threshold.
By raising the limit, many will no longer need to deal with complex tax paperwork, giving them more freedom to focus on growing their side businesses.
The Government hopes this change will encourage more people to explore additional income streams without the burden of extra administration.
HMRC is making a major change to thresholds
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Murray said: “From trading old games to creating content on social media, 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.”
Murray emphasised that the Government is “going further and faster to overhaul the way HMRC works” as part of their Plan for Change.
The reform aims to help “put more money in people’s pockets” by reducing administrative burdens on small-scale entrepreneurs. Industry experts have welcomed the changes to the tax threshold.
The Government’s focus on simplifying the tax system
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Laura Suter, director of personal finance at AJ Bell, said the move would benefit those with side hustles and help alleviate pressure on HMRC’s overwhelmed helplines.
Ellen Milner from the Chartered Institute of Taxation praised the Government’s focus on simplifying the tax system.
Eve Williams, CEO of eBay UK, commented: “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.”
Murray also discussed plans to tackle tax avoidance, including a reward scheme for informants targeting non-compliant large corporates and wealthy individuals.
HMRC and the Insolvency Service have agreed a joint plan to tackle phoenixism, where directors avoid company tax by going insolvent.
