The short version: yes, side hustles get taxed in the UK once your income from them goes over £1,000 in a tax year, and that £1,000 is turnover, not profit, so it catches more people than they think. You need to register for Self Assessment by 5 October after the tax year in which you went over that threshold, and since January 2024 platforms like eBay, Vinted, Etsy and Airbnb hand your sales data straight to HMRC anyway, so the “nobody will know” plan stopped working a while ago.
Yes, side hustles get taxed. The question is when
I get asked this constantly by people who’ve started reselling, freelance writing, dog walking, tutoring or making candles on the side while they hold down a day job. The answer is always the same: if you’re earning money from it, HMRC considers it income, full stop. It doesn’t matter that it started as a hobby, that you only do it three hours a week, or that you’re not registered as a business anywhere. The moment money changes hands for goods or services, it’s income in the eyes of tax law.
What changes is whether you owe anything on it, and that comes down to one number: £1,000.
The £1,000 trading allowance (and why it isn’t the free pass people think)
In the UK, you get a trading allowance of £1,000 a year. If your total income from self-employed or side hustle activity is under that, you don’t need to tell HMRC anything or pay tax on it. Simple enough.
Here’s where people trip up: that £1,000 is gross income, not profit. If you sell £950 worth of handmade jewellery but spent £600 on materials, you’re still under the £1,000 threshold on turnover, so you’re fine. But if you sell £1,400 worth and spent £600 on materials, you’re over the threshold on turnover even though your actual profit is only £800. Once you’re over £1,000 in turnover, you have to register and declare, and then you work out your tax on profit, not the raw sales figure.
I’ve had people tell me they “kept it under a grand” by only counting what landed in their bank account after fees. That’s not how it works. If Vinted or Etsy took a cut before the money reached you, the sale price still counts as your income, not the net amount after their fee.
When you need to register with HMRC
If your side hustle income goes over £1,000 in a tax year (6 April to 5 April), you need to register for Self Assessment by 5 October following the end of that tax year. So if you crossed £1,000 in June 2026, you need to be registered by 5 October 2027, and your first tax return will be due by 31 January 2028.
Miss that registration deadline and HMRC can fine you even if you end up owing no tax at all, because the penalty is for late registration, not late payment. I’ve seen people get a £100 late filing penalty purely because they didn’t realise the clock started the moment they went over the threshold, not the moment they got round to sorting it out.
- Under £1,000 turnover a year: no need to register or declare
- Over £1,000 turnover: register for Self Assessment by 5 October following that tax year
- Tax return and payment deadline: 31 January the following year
- Basic rate tax on side hustle profit: 20% once combined with your day job income takes you past your Personal Allowance of £12,570
The platforms are already telling HMRC. That’s the bit people miss
This is the part most guides gloss over, and it’s the uncomfortable one. Since 1 January 2024, digital platforms operating in the UK, including eBay, Vinted, Etsy, Airbnb, Deliveroo and Fiverr, are legally required to collect seller information and report it to HMRC if you sell more than 30 items or earn above roughly £1,700 in a year. That data gets shared automatically, without you doing anything, and HMRC can cross-reference it against your tax return, or the lack of one.
So the old approach of quietly selling on the side and hoping it goes unnoticed simply doesn’t hold up any more. It’s not that HMRC is coming for the person who sold their old wardrobe on Vinted for £200. It’s that if you’re running a genuine trading pattern, buying stock to resell, sourcing items specifically to flip, doing it repeatedly and for profit, the data trail already exists whether you registered or not. I’d rather my clients hear that plainly than assume they’re invisible.
What counts as taxable side hustle income
This trips people up because “side hustle” covers such a wide range of things. In HMRC’s eyes, all of the following count the same way:
- Freelance work: writing, design, virtual assistance, consulting
- Reselling: charity shop flips, retail arbitrage, clearing out your wardrobe for profit rather than just decluttering
- Content and creator income: YouTube ad revenue, sponsored posts, affiliate commissions, Patreon
- Services: tutoring, dog walking, cleaning, gardening, hairdressing from home
- Rental income: renting a room, renting equipment, Airbnb
- Selling handmade goods: candles, jewellery, art, on Etsy or at markets
What doesn’t count is selling your own personal possessions occasionally at a loss or for what you paid, which is why clearing out your loft on eBay a couple of times a year isn’t taxable trading. The distinction HMRC uses is whether there’s a profit motive and a degree of regularity. One-off sale of your old bike: fine. Buying ten bikes a month specifically to flip them for profit: that’s a trade, and it’s taxable from pound one over the allowance.
A real example from my own side hustle years
When I was rebuilding my business after the tough years, I picked up freelance social media consulting on the side while still doing bits of speaking and training. I remember sitting down in April one year and realising I’d crossed £1,000 in freelance fees back in July, months earlier, and hadn’t registered. I rang HMRC, explained I was late, and registered immediately. Because I got in touch before they got in touch with me, and because I still filed by the January deadline, there was no penalty. The lesson I took from that: the moment you notice you’ve gone over £1,000, register that week. Don’t wait until you feel ” set up” as a business, because HMRC doesn’t care about your branding or your logo, only your dates.
That experience is also why I tell people to separate their side hustle bank transactions from day one, even if it’s just a second free current account. Trying to reconstruct six months of Vinted sales and material receipts from memory in January is miserable, and I’ve done it, so trust me on that one.
What you can deduct before working out your tax
You’re only taxed on profit, so keep records of anything you spend to run the side hustle:
- Materials and stock costs
- Platform and payment processing fees (eBay, Etsy, Vinted, PayPal, Stripe)
- A proportion of your phone bill and home broadband if used for the work
- Postage and packaging
- Mileage if you’re driving for the work, at HMRC’s rate of 45p per mile for the first 10,000 miles
- A share of home costs if you have a dedicated space, using HMRC’s simplified flat rates or a calculated proportion
Alternatively, instead of claiming actual expenses, you can just claim the £1,000 trading allowance itself against your income if that works out better for you, though you can’t claim both the allowance and your actual expenses, it’s one or the other.
What if the side hustle is really passive income, not active work
Tax treatment differs slightly depending on whether you’re actively trading (selling goods, doing paid work) or earning passive income (dividends, interest, rental income, royalties). If you’re weighing up which route to take with your time and money, it’s worth reading the actual difference between active and passive income before you decide how to structure a new side project, because the tax reporting and the effort required are different animals. Passive income still gets taxed, but the rules on allowances, like the £1,000 property allowance or the dividend allowance, sit separately from the trading allowance covered here.
If you’re at the stage of choosing between building something that needs upfront cash versus something that needs your time instead, it’s worth working through the honest trade-off between passive income ideas that need money versus time before you pick a lane, because the tax admin looks quite different depending on which one you choose.
A quick word on the US and elsewhere
I split my time between the UK, the US and Israel, and the principle is the same everywhere even though the numbers differ. In the US, side hustle income is taxable from the first dollar, there’s no equivalent of the UK’s £1,000 allowance, though you don’t file a Schedule C unless net earnings from self-employment hit $400. What changed recently is the 1099-K reporting threshold: payment platforms like PayPal, Venmo and Etsy now have to send the IRS a form once you cross a much lower threshold than they used to, and that threshold has been dropping year on year toward $600. Same story as the UK: the platforms report you whether or not you report yourself.
In Israel, self-employed status (osek patur or osek murshe) has its own turnover thresholds and VAT rules, but the underlying logic doesn’t change: money earned for goods or services is reportable income, and the tax authority in every country I’ve worked in now gets data feeds from the big platforms.
What most people get wrong about “under the radar” income
The uncomfortable bit, the one most people avoid saying out loud, is that plenty of side hustlers aren’t hiding from HMRC deliberately, they’ve just never sat down and worked out that their turnover crossed £1,000 months ago. It’s not fraud, it’s just not knowing the number. But ignorance doesn’t stop the penalty. HMRC can charge interest and penalties on tax owed going back years if they find unreported trading income, and “I didn’t realise it counted” isn’t a defence that gets you out of the bill, even though it might get you out of the harshest penalty tier if you come forward first.
My blunt advice: track every side hustle payment from day one, check your running total every quarter, and register the moment you’re close to £1,000, not after you’ve blown past it. It takes ten minutes on the HMRC website and saves you a stressful phone call later.
If you’re building a side income into something bigger and want to understand what works long term rather than what looks good on a screenshot, I’ve written honestly about what I’ve learned from earning passive income after losing it once and building it back, and a broader look at what makes passive income pay off versus what most people get wrong.
Frequently asked questions
Do I have to pay tax on a side hustle that earns less than £1,000 a year?
No. In the UK, the trading allowance means you don’t need to register with HMRC or pay tax if your total side hustle turnover is under £1,000 in a tax year. Over that figure, you need to register for Self Assessment and declare it.
Will HMRC find out about my side hustle even if I don’t tell them?
Increasingly, yes. Since January 2024, platforms including eBay, Vinted, Etsy and Airbnb are required to report seller data to HMRC once you pass certain sales thresholds, so relying on not being noticed is no longer a workable plan.
What happens if I don’t register my side hustle in time?
You can be fined for late registration even if you end up owing no tax, because the penalty applies to missing the 5 October deadline itself. If you’re late, register as soon as you notice and still file by 31 January, which can avoid the harsher penalty tiers.
Can I deduct expenses from my side hustle income before paying tax?
Yes, you can deduct genuine costs like materials, platform fees, postage and a proportion of home or phone costs, or alternatively claim the flat £1,000 trading allowance instead, whichever gives you the better result. You can’t claim both on the same income.
