Do You Pay Tax on a Side Hustle in the UK?

Thanks to the £1,000 trading allowance, you can earn up to £1,000 a year from a side hustle without paying tax or telling HMRC. Earn more and you need to register for Self Assessment and pay tax on the profit above the allowance.

Last reviewed: 30 May 2026 · 2 min read

Key Facts

The trading allowance lets you earn £1,000 a year tax-free from side work
Above £1,000 you must register for Self Assessment with HMRC
Tax is charged on profit, after the allowance or expenses

The £1,000 trading allowance

HMRC lets you earn up to £1,000 a year from self-employed or casual work — selling crafts, freelancing, tutoring — without paying tax or even declaring it. This is the trading allowance, and it's separate from your personal allowance for employment income.

So if your side hustle brings in £900 a year on top of your job, there's nothing to report. Cross £1,000 in income, though, and the rules change.

When you have to tell HMRC

Once your side hustle income goes over £1,000 in a tax year, you must register for Self Assessment and file a tax return. You can then either deduct the £1,000 allowance or your actual business expenses — whichever is more — and pay tax on the profit that's left.

The tax rate matches your income tax band, so profit usually gets taxed at 20% if you're a basic-rate taxpayer. Online platforms now report seller information to HMRC, so it's not worth ignoring.

FAQ

Frequently Asked Questions

Do I need to declare income from selling on Vinted or eBay? +

Only if you're trading — buying or making things to sell for profit — and earn over £1,000 a year from it. Selling your own unwanted personal items usually isn't taxable, however much you make. HMRC now receives data from these platforms, so genuine traders should register if they're over the allowance.

What happens if I don't declare my side hustle? +

If you earn over £1,000 and don't declare it, you risk penalties and interest on unpaid tax once HMRC catches up — and with platforms now sharing data, that's more likely than ever. Registering for Self Assessment and paying what you owe is far cheaper than the fines for not doing so.

Can I claim expenses against my side hustle income? +

Yes. Instead of the £1,000 trading allowance, you can deduct genuine business costs — materials, equipment, a share of phone or travel costs — from your income, and pay tax only on the profit. Use whichever gives the bigger deduction. Keep records and receipts in case HMRC asks.

Topics covered

tax side hustle self assessment

This article is for informational purposes only and does not constitute financial advice. Always do your own research or speak to a qualified financial adviser before making financial decisions.