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
This treats your side income as self-employment taxed on top of your main income, applies either your actual expenses or the £1,000 trading allowance (whichever helps more), and adds Class 4 National Insurance on the profit. It doesn't cover VAT, limited-company structures, the rent-a-room or property allowances, or student loan repayments. Treat it as a guide for budgeting, not a final tax bill.
Source: HMRC — tax-free allowances on property and trading income
This is an estimate to help you plan, not financial, tax or legal advice.
When a side hustle becomes taxable
Plenty of side income never troubles the taxman. The trading allowance lets you earn up to £1,000 a year from casual or self-employed work tax-free — selling crafts, a bit of freelancing, weekend tutoring, that sort of thing. Stay under £1,000 and there’s usually nothing to declare.
Go over £1,000 and the picture changes. The profit becomes taxable, you’ll normally need to register for Self Assessment, and the tax is worked out at your marginal rate — the rate on your next pound of income, which depends on what you already earn from your main job.
Why your main income matters
Side income stacks on top of your existing income. If your day job already uses up your personal allowance and basic-rate band, your side profit could be taxed at 40% even though the amounts are small. If you earn little or nothing else, some of the side profit might fall in your personal allowance and be tax-free. That’s why this calculator asks for your main income — it changes the rate that applies.
Expenses or the allowance — pick the bigger one
You can knock your real costs off your side income, or claim the flat £1,000 trading allowance instead. The sensible move is whichever is larger. If you spent £200 on materials, the £1,000 allowance wins. If you spent £2,500, claim the actual expenses. You can’t use both, and the calculator above already picks the better option for you.
Set the money aside as you go
The most common side-hustle mistake isn’t the tax itself — it’s being surprised by it months later. Because the bill is settled through Self Assessment after the tax year, it’s easy to spend money that was really the taxman’s. Moving the estimated amount into a separate pot as you earn keeps the January deadline from stinging.
