Part-time work in the UK – is extra income taxed?
- TBA
- Sep 13, 2024
- 2 min read
Updated: Feb 25
Will HMRC know if I have secretly earned extra money? How does HMRC track your income? How should I manage my additional income?
These are all excellent questions that we will answer today!
1. Will HMRC know if I work part-time and secretly earned extra money?
HMRC typically relies on PAYE records to see your full-time income. If you have other income, such as rental income, and you don’t report it in your Self-Assessment, HMRC won’t directly know if you’ve earned additional income. However, that’s not to say that HMRC will be unaware. There are other ways that HMRC can find out.
In an effort to combat and reduce tax evasion, HMRC invested £80 million over seven years to develop a powerful data analysis system called ‘Connect’.
This system is incredibly impressive and has taken the monitoring capabilities of the UK’s financial system to a whole new level.
HMRC Connect contains a vast database of personal and business information, allowing them to cross-check data from various transactions to identify any potentially undeclared taxes. Therefore, it’s extremely difficult to hide any secret earnings from part-time work!
2. How does HMRC track your income?
HMRC’s Connect system can obtain information from the following sources:
Bank accounts in the UK and 60 other jurisdictions
Various pension and investment records which are typically used to check whether taxpayers have claimed the correct pension relief or exceeded ISA tax-free limits
Other government and public agencies such as the Land Registry, to check if taxpayers own multiple properties
Online sales platforms such as Amazon, eBay, Airbnb, and property websites like Rightmove and Zoopla, to see if you have earned income from selling goods, renting out property, or selling houses
3. How should I manage my part-time work income?
That’s just part of what the Connect system can investigate. There is much more that HMRC has not disclosed!
Even if you only have a few extra income transactions per year, if they meet the threshold for taxation, it’s important that you correctly declare and pay the right amount of tax!
If you’re not sure what to do, we recommend appointing a specialist tax advisor to help you with this.