What expenses can CIS subcontractors claim?
Claiming the right expenses is what turns a CIS deduction into a refund. Here's what subcontractors can usually claim, with the simple test for whether a cost counts.
In short: If you earn more than £1,000 from a side hustle in a tax year, you generally need to tell HMRC and register for Self Assessment. Below £1,000, the trading allowance usually means there's nothing to declare. The profit above £1,000 is taxed at your marginal rate, on top of your main income.
Side hustles have gone mainstream — reselling, freelancing, tutoring, making things to sell. And with that comes a quietly nagging question: at what point does HMRC need to know? The good news is the rule is clearer than most people fear.
The £1,000 line
The key number is £1,000. HMRC’s trading allowance lets you earn up to £1,000 a year from casual or self-employed activity without paying tax on it or, in most cases, even needing to declare it. Stay under that and you can usually relax.
Cross £1,000 in a tax year and the picture changes: the income becomes taxable, and you generally need to register for Self Assessment and report it on a tax return.
How much tax you’ll actually pay
This is where your main job matters. Side income doesn’t get its own fresh set of tax bands — it stacks on top of what you already earn. So if your salary already uses up your personal allowance and basic-rate band, your side profit could be taxed at 40% even if the amounts are modest. If you earn little else, some of it might fall in your personal allowance and be tax-free.
You also get to choose your deduction: either the flat £1,000 trading allowance or your actual expenses, whichever is larger — not both. The Side Hustle Tax Calculator applies the better option automatically and shows roughly how much to set aside.
Selling your own stuff vs trading
A common worry: “I sold a load of things on a marketplace — do I owe tax?” Selling your own used belongings you no longer need generally isn’t taxable trading. It’s different when you’re buying or making things specifically to sell at a profit — that’s a trade, and the £1,000 rule applies. The line is intention: are you clearing out, or running a small business?
Set the money aside
The most common side-hustle mistake isn’t the tax itself, it’s being caught out by it months later. Because the bill is settled through Self Assessment after the tax year ends, it’s easy to spend money that was really earmarked for HMRC. Moving the estimated amount into a separate pot as you go takes the sting out of the January deadline. If you keep receipts, the guide to allowable expenses gives a sense of what counts as a business cost.
General information, not tax advice. Thresholds and rules can change — check HMRC’s guidance on the trading allowance and register in good time if you cross £1,000.