Do I need to tell HMRC about my side hustle?
Selling online or freelancing on the side? Here's the simple rule for when HMRC needs to know, and how the £1,000 trading allowance keeps small earnings tax-free.
What this assumes
Estimates HMRC Self Assessment penalties: a £100 fixed filing penalty, £10-a-day penalties between 3 and 6 months (capped at 90 days), and the higher of 5% of the tax or £300 at 6 and 12 months. Late-payment penalties of 5% of unpaid tax apply at 30 days, 6 months and 12 months, plus approximate interest. Your exact position can differ, and HMRC may reduce penalties if you have a reasonable excuse.
Source: GOV.UK — Self Assessment penalties
This is an estimate to help you plan, not financial, tax or legal advice.
How Self Assessment penalties build up
The frustrating thing about HMRC penalties is that they’re designed to escalate, so leaving a late return often costs far more than the tax itself. There are two separate streams: penalties for filing late and penalties for paying late. This tool estimates both, plus the interest that accrues on unpaid tax.
Filing penalties
These apply even if you owe no tax, which catches a lot of people out:
- £100 the moment the return is late.
- £10 a day once you’re more than three months late, for up to 90 days — a further £900.
- At six months and again at twelve months, the higher of 5% of the tax due or £300.
So a return that’s a year late, with no tax owed, can still rack up well over £1,000 in filing penalties alone.
Payment penalties and interest
Pay the tax late and there’s a separate charge: 5% of the unpaid tax at 30 days, again at six months, and again at twelve months. On top of that, interest runs on the unpaid amount the whole time, roughly tracking the Bank of England base rate plus a margin. A £2,000 bill paid seven months late can pick up several hundred pounds in payment penalties and interest. Enter your figures above to see an estimate.
What to do if you’re late
File as soon as you can — every milestone you cross adds more, so stopping the clock matters. If you genuinely couldn’t file on time for a serious reason, you can appeal with a reasonable excuse. And going forward, the payment on account calculator and the side hustle tax guide help you see the bill coming so the deadline never sneaks up again.
General information, not tax advice. Penalty and interest rules change, and HMRC assesses your specific circumstances — check GOV.UK and appeal if you have a reasonable excuse.