Side Hustles & Tax

When Does a Side Hustle Become Taxable?

If you earn money from any regular activity with the intention of making a profit, it’s trading income and potentially taxable. However, the £1,000 trading allowance means:^[2]

Under £1,000 gross income — completely tax-free, no need to register or report
Over £1,000 gross income — you must register as self-employed and file a Self Assessment return

What Counts as a Side Hustle?

Common side hustles that may be taxable include:^[1]

Selling online (eBay, Etsy, Amazon, Vinted)
Freelancing (design, writing, coding, consulting)
Tutoring or coaching
Delivery driving (Deliveroo, Uber Eats)
Ride-hailing (Uber)
Content creation (YouTube, Twitch, Patreon)
Dog walking, cleaning, babysitting

Selling Personal Possessions

Selling your own unwanted belongings is generally not taxable — it’s not trading. But if you regularly buy items to resell at a profit, that crosses into trading.

How to Register

If your side hustle income exceeds £1,000, you need to:^[3]

Register for Self Assessment with HMRC as self-employed
Keep records of all income and expenses
File a tax return by 31 January after the end of the tax year
Pay any tax owed by 31 January

Claiming Expenses

You can deduct business expenses from your side hustle income. If your expenses are low (under £1,000), you might be better off using the trading allowance instead of actual expenses.^[2]

Impact on Your Day Job Tax

Your side hustle profits are added to your employment income to calculate your total tax. If your combined income pushes you into a higher tax band, you’ll pay the higher rate on the excess.^[4] When you file your Self Assessment online, your PAYE income and side hustle profits are reported together.

Example: You earn £45,000 from your job (taxed through PAYE). Your side hustle makes £8,000 profit. Combined: £53,000. The £2,730 above £50,270 is taxed at 40% instead of 20%.

Frequently Asked Questions

Do I need to pay tax on my side hustle?

If your side hustle gross income is under £1,000 per year, it is completely tax-free and you do not need to register or report it. Over £1,000, you must register as self-employed and file a Self Assessment return.

Do I need to tell HMRC about selling on eBay or Vinted?

Selling your own unwanted belongings is generally not taxable. However, if you regularly buy items to resell at a profit and your income exceeds £1,000, that counts as trading and must be reported.

Will my side hustle affect my day job tax?

Yes. Your side hustle profits are added to your employment income. If your combined income pushes you above £50,270, you will pay the 40% higher rate on the excess.

What is the £1,000 trading allowance?

The trading allowance lets you earn up to £1,000 gross from self-employment without paying tax or needing to register. If your income exceeds £1,000, you can still deduct the £1,000 allowance instead of claiming actual expenses.

Sources

Working for yourself — GOV.UK
Tax-free allowances on property and trading income — GOV.UK
Register for Self Assessment — GOV.UK
Self Assessment tax returns — GOV.UK