Latest / The 3Bz Podcast - Building Better Business / EP131 - The Gig Economy Tax Headache: What They Don’t Tell You

Transcript

EP131 - The Gig Economy Tax Headache: What They Don’t Tell You · The 3Bz Podcast - Building Better Business

• 0:01
  Hi there business owner, and welcome to the Three BS Podcast,
• 0:04
  the place where we go beyond the numbers and dive into the
• 0:07
  strategies to help you build a Better Business one step at a
• 0:10
  time. I'm your host, Stephanie, a
• 0:12
  multi awarding entrepreneur with over a decade of experience in
• 0:15
  the bookkeeping and currency world.
• 0:17
  If you're a business owner looking to streamline, grow, and
• 0:19
  get back the time that you deserve, you're in the right
• 0:21
  place tackling real world problems, answering tough
• 0:24
  questions, and digging deep into business building secrets in
• 0:27
  just 15 minutes each week. So Are you ready to build a
• 0:31
  Better Business with confidence and clarity?
• 0:33
  Then let's go. Hello and welcome back to
• 0:37
  episode 131 of the Three Bees podcast, where we keep business
• 0:42
  real, numbers honest and HMRC slightly less scary.
• 0:46
  I'm Stephanie Marshall and today I want to talk to you about
• 0:49
  something that's exploded over the past few years, and that's
• 0:51
  the gig economy. Whether you're delivering for
• 0:54
  Uber, renting on Airbnb, selling your services on fibre, running
• 0:57
  a side hustle on Etsy shop, or posting paid content on
• 1:00
  Onlyfans, if you're making money outside of a job, this episode
• 1:04
  is for you. Because while platforms have
• 1:07
  made it easy for you to earn money, they've not made it easy
• 1:10
  to understand the tax side of it.
• 1:12
  And we've been some pretty scary headlines in the news.
• 1:15
  It's not exactly accurate. So let's get into what no one's
• 1:18
  telling you about earning money in the gig economy, what HMRC
• 1:21
  expects from you, and how to get ahead of this chaos before
• 1:24
  January hits. You're probably thinking, what
• 1:26
  do you mean by the gig economy? No, I don't mean a Louis
• 1:29
  Tomlinson concert. The gig economy is basically
• 1:32
  anyone earning money outside of traditional employment, usually
• 1:35
  through apps, platforms or side businesses.
• 1:38
  So examples are things like the Uber drivers, Airbnb hosts, Etsy
• 1:42
  or eBay sellers, Instagram and TikTok creators, freelancers
• 1:46
  that use platforms like Fiverr or Upwork, and those that
• 1:50
  deliver like Deliveroo, Justy, the list goes on.
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  You don't have a boss, you set your hours, but you're still
• 1:56
  self-employed in the eyes of the HMRC despite having to uphold
• 2:01
  the terms and conditions of the platform itself.
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  That means tax record keeping and understanding what actually
• 2:08
  counts as income. Now this is the bit that catches
• 2:10
  a lot of people out. There's something called the
• 2:13
  Trading Allowance and you'll hear it quoted quite a lot.
• 2:15
  I've talked about it before on the podcast.
• 2:17
  If you earn under £1000 from self-employment in a tax year,
• 2:21
  you don't need to register or submit a tax return.
• 2:24
  And that's absolutely true, but people often forget what's
• 2:27
  included in that £1000. If you've got multiple little
• 2:30
  streams, 300 here from reselling clothes, 400 there from doing
• 2:35
  deliveries on weekends and 500 from a couple of freelance jobs,
• 2:38
  then you've passed the threshold already.
• 2:40
  So it's not per platform, it's not per side hostel, it's total
• 2:45
  self-employed income. If you go over 1000 lbs in a tax
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  year you will need to register a self-employed with HMRC and
• 2:52
  complete a self-assessment tax return each year.
• 2:55
  So when do you need to register and what happens if you don't?
• 2:58
  Well, the deadline to register a self-employed is the 5th of
• 3:00
  October. In the second, actually, you
• 3:02
  start earning. So if you earned over £1000
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  between April 2024 and April 2025, you will need to register
• 3:09
  by the 5th of October 2025. If you don't, you risk fines and
• 3:13
  interest, even if you didn't actually owe very much tax in
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  the 1st place. The HMRC does not care how
• 3:19
  casual your gig was, if you earned it and it wasn't taxed
• 3:23
  already, they want to know about it.
• 3:25
  And trust me, the platforms are under pressure to share data and
• 3:29
  HMRC is catching up. Here's a simple rule if you want
• 3:32
  to kind of understand what counts as taxable income.
• 3:35
  If someone has paid you and you weren't taxed at source and it
• 3:39
  wasn't a gift, it's income. So that includes cash in hand,
• 3:43
  jobs, tips, platform payouts, affiliate links, brand
• 3:46
  collaborations, subscription income like Patreon are only
• 3:50
  fans. Yes, even if it went through
• 3:52
  PayPal. Yes, even if you only made a few
• 3:54
  100 lbs. Yes, even if you didn't get paid
• 3:57
  in the end but sent the invoice. It's your responsibility to
• 4:00
  track, report and keep records. But there is some good news
• 4:04
  here. If you're self-employed, you can
• 4:05
  claim allowable expenses to reduce your tax bill for gig
• 4:09
  workers. Common ones include mileage if
• 4:11
  you drive for work, a portion of your mobile phone bill, platform
• 4:15
  fees, or Commission equipment are tools you bought solely for
• 4:19
  work, Home Office expenses, even if it's just a laptop and a
• 4:22
  corner of your own room and things.
• 4:24
  Subscriptions for things like Canva and all the things that we
• 4:27
  use to help create content or to help you in your gig.
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  What you can't claim for, however, are things like
• 4:33
  everyday clothes, your whole rent or mortgage each month, and
• 4:37
  Netflix. Yes, even if you post reaction
• 4:40
  videos. If it's genuinely only for work,
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  keep the receipt and log it. Now, there's some common
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  mistakes that gig workers make all the time, and some of them
• 4:49
  are quite big. So here's some huge red flags.
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  One, not saving for tax at all. I've talked about it time and
• 4:56
  time again. If you're receiving income from
• 4:59
  a business or from working, you should be setting aside 20% of
• 5:02
  it into a savings part just to cover your tax bill.
• 5:06
  You might not need it all, but it shouldn't be any more than
• 5:08
  20% if you are a sole trader. Forgetting to register in time
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  because that then leads to interest charges, fines and
• 5:16
  penalties. Mixing business and personal
• 5:19
  income in the same bank account. If it's gig economy, even if
• 5:22
  you're just selling on eBay or Etsy, have a separate bank
• 5:26
  account that all the money goes into.
• 5:28
  It makes it cleaner and clearer at year end.
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  For tax. It will help you if you have an
• 5:31
  accountant or a bookkeeper and it would just make life much
• 5:35
  easier for you. If you need recommendations on
• 5:38
  bank accounts that are really good for this sort of thing,
• 5:40
  drop me Adm on Instagram or send us an e-mail.
• 5:43
  The link is in the show notes and I will give you some of my
• 5:45
  recommendations. Ignoring letters from HMRC.
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  Those brown envelopes I know fill you with dread, but if you
• 5:51
  don't open it, it's a bit like it's Schrodinger's cat.
• 5:55
  If you don't open it, you don't know it's dead.
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  So go and open those letters to HMRC because actually then you
• 6:01
  know what you're dealing with. And then come to someone like us
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  or an accountant or a bookkeeper that can help you understand
• 6:06
  what that means if it, if it's just jargon to you.
• 6:09
  Spending all their income without planning ahead is
• 6:11
  another one. Just because you've got £100 in
• 6:13
  your bank, that £100 is not yours.
• 6:15
  I think it's really good to think of it as OK, I've received
• 6:18
  £100, that's not all mine, £20 is for tax, this is for my
• 6:22
  expenses. This is what's left, this is
• 6:24
  what's mine, which is in effect your profit and believing that
• 6:27
  it's just a side thing so it means it doesn't count.
• 6:30
  Another big red flag is people think that if you're just
• 6:34
  selling your own clothes on eBay, like if you're wearing
• 6:37
  your clothes and just selling off your own clothes, as long as
• 6:40
  it's not a business that's not part of your income, that's
• 6:42
  counted, that's not eBay, aren't going to report you to the HMRC.
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  What the headlines had had reported is that the HMRC could
• 6:50
  now see what you were selling. They kind of always, they
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  already kind of could. What it means now though is that
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  they can open an investigation into you and request that
• 6:59
  information as part of their evidence.
• 7:01
  So as long as it's just your own clothes and it's not a business,
• 7:04
  then you would be fine. So please don't panic too much
• 7:07
  about selling your own things on vintage or Etsy or whatever.
• 7:11
  Most of these red flags though, just come down to not taking it
• 7:14
  seriously enough until it's too late.
• 7:15
  We have so many clients that come to us at the practice.
• 7:17
  They've got themselves in a mess.
• 7:18
  We're going back two or three years worth because they've done
• 7:21
  a little bit of content creation work here or they've done some
• 7:25
  promo here or they've got some payments from affiliates that
• 7:28
  and they've not realised that that actually counts.
• 7:31
  The fix to this is quite simple. Just get organised early, even
• 7:35
  if it's small, even if it's just a few jobs a month, even if it's
• 7:39
  just a couple of times a year. You'll thank yourself when
• 7:41
  you're not panicking in January because you've got it noted
• 7:43
  down. If I ask you what you did 11
• 7:46
  months ago, if you've not got it written down anyway, you
• 7:49
  probably couldn't tell me, probably couldn't even tell what
• 7:50
  you had for breakfast that day. So keep it, take a note, keep it
• 7:55
  down. Even if you don't need it, at
• 7:57
  least you've got the evidence there to back you up when tax
• 8:00
  season comes around. If you're a little lost, if
• 8:04
  you've made money and haven't done anything about it yet,
• 8:06
  here's what to do this week. Work out how much you earned in
• 8:09
  the last tax year, April to April.
• 8:12
  Register with HMRC if you passed £1000 total income.
• 8:17
  And don't forget platforms like Stripe.
• 8:19
  The £1000 total is the actual sale, not the amount you were
• 8:23
  paid out into your bank. Start keeping a record of what
• 8:26
  you earn and what you spend. Set aside at least 20% of what
• 8:32
  you earn for tax and speak to a bookkeeper like us if you're
• 8:36
  unsure or stuck. There's free 50 minute discovery
• 8:39
  calls on the ABCSUK website you can book in just to get some
• 8:42
  clarity and know where to go from here.
• 8:45
  And remember, doing it right from the start costs way less
• 8:48
  than going back and fixing it later.
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  Not only when you have additional bookkeeping
• 8:51
  accountancy costs that you've not accounted for, but you will
• 8:54
  have fines and penalties and interest from the HMRC too
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  potentially. So do it first and then go back
• 8:59
  and fix it later. To wrap up this episode, the gig
• 9:02
  economy gives you flexibility, freedom and a chance to earn on
• 9:05
  your own terms. But don't forget that freedom
• 9:08
  also comes with responsibility and HMRC just doesn't care if it
• 9:13
  was just a few £100. Get ahead of it, ask questions
• 9:17
  and keep it clean because chaos isn't a business plan and if
• 9:21
  you're juggling multiple income streams and don't know what's
• 9:23
  what, then that's exactly what we can help with.
• 9:25
  Do go and book that discovery call at ABCSU, k.com or drop us
• 9:29
  Adm on social and we'll chat about how we can support you
• 9:32
  long term or short term. 1 off. That's it for this week.
• 9:36
  I appreciate you so much for listening to the Three BS
• 9:39
  Podcast. I hope that it is useful for
• 9:42
  you. And my hope is that if you're
• 9:44
  listening to this, maybe you're a business owner who doesn't
• 9:47
  have these gig economy site hostels, but you know someone
• 9:49
  who does. You can send this episode across
• 9:51
  to them or across Spotify, Apple Podcasts, Amazon Music, Audible,
• 9:57
  YouTube. The list is endless.
• 10:00
  If there's somewhere, if there's a platform that you think we
• 10:03
  should be on that we're not, do drop me a message and let me
• 10:05
  know too, so we can get that sent out to more people.
• 10:08
  I know an Easter on TikTok is on the list.
• 10:11
  It's on the never ending To Do List.
• 10:14
  I'm not ready to quite add another platform just yet.
• 10:16
  So if you are a TikTok content creator, TikTok social media
• 10:23
  manager, do reach out to us in the DMS.
• 10:25
  Do send us an e-mail. Maybe it's time for me to learn
• 10:28
  to delegate a little bit more, as we said the other episode and
• 10:31
  give that to somebody else to deal with.
• 10:35
  I've been. Stephanie, thank you so much for
• 10:37
  this episode of the Three BS Podcast, and I'll see you next
• 10:39
  week for the next one. Bye.
• 10:42
  And that brings us to the end of another episode of The Three BS
• 10:45
  Podcast. I hope you found it useful and
• 10:47
  that you're walking away with some motivation, inspiration or
• 10:50
  education to help you build a Better Business.
• 10:54
  Don't forget to subscribe, leave a review and of course, connect
• 10:56
  with us on social media for more insights, tips and behind the
• 10:59
  scenes content. Your next step in building a
• 11:01
  Better Business is just a click away.
• 11:03
  I can't wait to connect with you and I'll see you on the next
• 11:05
  episode. Bye.