£1,000 of trading income is exempt

Gross, not profit, and per person rather than per activity. Below it there is nothing to report and no return needed on account of the side hustle.

Above it you choose allowance or expenses

You may deduct the £1,000 allowance or your actual expenses, whichever is larger — but not both. For a business with few costs the allowance usually wins.

Platforms report your income to HMRC

Since 2024 online marketplaces report seller income directly. Receiving a letter does not mean you owe tax — selling your own used possessions is not trading — but it does mean HMRC has the figures.

It stacks on top of your job

Side income is taxed at your marginal rate, not from scratch, so a higher-rate employee pays 40% and 2% NI on the first pound of profit.

Do I need to pay tax on my side hustle?

The £1,000 trading allowance, when a return becomes necessary, and what the online platform reporting rules actually mean for you.

What changes for you

£1,000 of trading income is exempt
Gross, not profit, and per person rather than per activity. Below it there is nothing to report and no return needed on account of the side hustle.
Above it you choose allowance or expenses
You may deduct the £1,000 allowance or your actual expenses, whichever is larger — but not both. For a business with few costs the allowance usually wins.
Platforms report your income to HMRC
Since 2024 online marketplaces report seller income directly. Receiving a letter does not mean you owe tax — selling your own used possessions is not trading — but it does mean HMRC has the figures.
It stacks on top of your job
Side income is taxed at your marginal rate, not from scratch, so a higher-rate employee pays 40% and 2% NI on the first pound of profit.

The decisions this opens up

Each works on your own figures and shows every option with the workings. Free, and no sign-up.

Should I incorporate?Compares the total tax on the same profit as a sole trader and as a limited company, with the running costs of the company included.Should I claim actual or simplified expenses?Compares HMRC's flat monthly rate for working from home against claiming the business proportion of your real household costs.Should I register for VAT?Compares staying unregistered, registering and raising your prices, and registering and absorbing the VAT — using the mix of business and consumer customers you actually have.

Dates this puts in your diary

5 October after the tax yearRegister for Self Assessment if you need to
31 JanuaryFile and pay

Run the numbers

Side Hustle Tax Calculator Self Employed Tax Calculator Do I Need To File A Tax Return

Software that files it for you

Partner links

If you keep your own books, these are the packages that handle Self Assessment and Making Tax Digital.

FreeAgent

4.8

Free optionMTD ready

The freelancer and contractor favourite, free with some bank accounts.

Free forever with a NatWest, Royal Bank of Scotland, Ulster or Mettle business account
Built-in Self Assessment and MTD for Income Tax filing

From £0 with a NatWest, RBS or Mettle account, otherwise about £19/mo

See FreeAgent

QuickBooks

4.6

MTD ready

The big all-rounder with the deepest MTD track record.

Sole Trader plan built specifically for Self Assessment and MTD
Snap and store receipts, automatic bank feeds

From about £10/mo, frequent 90% off intro offers

See QuickBooks

Xero

4.5

MTD ready

The scale-up choice once you have staff, stock or VAT.

Huge app marketplace and the accountant industry standard
Strong for VAT, payroll and multi-user limited companies

From about £15/mo

See Xero

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