Side Hustle Tax Guide

For people earning a little on top of a main income — selling on Vinted or eBay, weekend tutoring, driving for a delivery app, the odd freelance gig. The question this answers is narrow: do I need to tell HMRC about this, and if so, how much tax do I owe? It is not a guide to running a full business; for that see the self-employment income guide.

The £1,000 Trading Allowance

The UK gives you a £1,000 tax-free allowance for trading income each tax year. It is based on gross income (total sales before any costs), not profit. If your side hustle takes in £800 selling crafts, nothing is owed and nothing needs reporting. Cross £1,000 and the whole amount becomes reportable — though you still get to use the allowance. See GOV.UK: Tax-free allowances for trading and property income.

Below £1,000: nothing to do

If your gross trading income for the tax year is £1,000 or less, you do not need to register for Self Assessment or declare it, even if you also have a PAYE job. Keep a simple record of what you earned in case HMRC asks.

Above £1,000: register and declare

Once gross income passes £1,000, you must register for Self Assessment by 5 October after the tax year ends, then file a return and pay by the following 31 January. When you declare, you choose one of two options for each tax year:

• Claim the £1,000 allowance — deduct £1,000 from gross income and pay tax on the rest, with no separate expense claims.
• Claim actual expenses — deduct your real costs instead, and pay tax on the resulting profit.

You cannot do both. Pick whichever gives the lower taxable figure.

Worked example: £3,000 of side income

You have a £30,000 PAYE job and earn £3,000 from weekend tutoring, with £400 of genuine expenses (materials, a proportion of broadband, software).

• Actual expenses: £3,000 − £400 = £2,600 taxable profit.
• Trading Allowance: £3,000 − £1,000 = £2,000 taxable profit.
• Result: the allowance wins. As a basic-rate payer you owe 20% of £2,000 = £400.

The allowance tends to win when your real costs are below £1,000 — common for low-overhead side hustles. Once your expenses exceed £1,000, actual expenses usually win.

Common mistakes

• Confusing gross and net. The £1,000 test is on total sales, not on what you keep after costs.
• Assuming platforms report for you. Selling platforms and gig apps may share data with HMRC, but the legal duty to register and declare is yours.
• Forgetting benefits. New self-employed income can affect Universal Credit entitlements — report it to the benefits office separately.

Where this does not apply

The Trading Allowance cannot be set against income from your employer or against partnership income. Selling personal possessions you no longer want is generally outside trading rules, but regular buying-to-sell is trading. Capital Gains Tax applies separately to selling personal investments.

See the combined impact

Add your side income in the UK Salary Calculator to see how it sits alongside your PAYE salary. Figures use 2026/27 rules, which can change each Budget.