The sharing economy is completely changing the way people are doing business, and for the better. In this article, we’re going to touch on what exactly is the sharing economy, special benefits for UK residents, and how everybody can profit from it.
What is the Sharing Economy?
The sharing economy involves sharing items for free or a fee, typically via the internet. Renting out a guest bedroom per night, one’s car by the hour, or tools in the shed to neighbours for a modest fee are all examples of the sharing economy. The sharing economy includes physical items, ideas and services. For example, crowdsourcing platforms let you outsource work to one or a hundred strangers to perform, whether it is translation work, transcription of audio files or content creation. Websites facilitate the peer to peer exchange to link customers with providers.
In terms of figures, in 2015 the sharing economy generated revenues of £7.4bn in the UK. By the year 2025 it is expected that there will be £140bn worth of transactions each year in the UK.
Sharing Economy Tax Breaks
The UK recently changed tax law to let you earn up to £2k tax-free from the sharing economy, making the UK the first nation in the world to formally set up sharing economy tax breaks. The first tax break is a £1,000 a year for online sales or the trading of items. The same law created a separate £1,000 a year tax break for property related income. You can claim both tax breaks in the same year for a total tax-free income of up to £2,000 pounds per year. If you earn more than £1,000 a year, you have to declare the income, but can still take advantage of the tax allowance.
These tax law changes were implemented to encourage micro-entrepreneurs. An estimated half million people will see benefit from the tax cut.
Ideas for UK Residents
Airbnb welcomed the tax breaks and believes it will increase Airbnb’s presence in the UK. However, the property rental tax break does not just apply to renting out your home. You can rent out an office or workshop workspace through Vrumi. You can also rent out a parking space through YourParkingSpace, by the hour, the day or the month.
Providing services through crowdsourcing sites like Amazon’s Mturk, selling items online via eBay and performing small tasks for pay for customers via Fiverr and Taskrabbit will allow many unemployed and underemployed to earn extra income. And it may allow them to find longer term, higher paying employment. Although these sites effectively enable people to obtain freelance work more easily, they are often included under the sharing economy umbrella.
Another benefit of the sharing economy is the fact that it can allow you to monetise items you already own. While Uber and Lyft get the most attention as average people earn extra money working as taxi drivers, other sites let you rent out your car by the hour or the day to customers without driving them around. And it isn’t just cars. Sites like Boatsetter and Boatbound let you rent out your boat on days you aren’t using it, while Spinlister lets you rent out your bike.
The UK has made it clear that they want to be at the forefront of the sharing economy. Tax breaks for people selling or offering services through crowdsourcing sites or for property rentals should give many Brits a chance to earn extra money on the side, legally.