Side Hustle Tax in the UK (2026): When You Owe Tax, When to Register and What You'll Pay

Selling on Vinted, tutoring two evenings a week, delivering food at weekends, renting out the spare room or posting sponsored videos: millions of people in the UK earn money on top of a job. Whether that money is taxed depends on what kind of income it is and how much you make, not on what you call it. This guide is for employees, students and retirees with extra income in the 2026-27 tax year. It explains the £1,000 allowance, the platform reporting rules that started in 2024, why selling your own things is usually tax-free, when to register, and what you'll actually pay, with worked examples.

Quick answer

If your side hustle brings in £1,000 or less in gross income in a tax year, the trading allowance makes it tax-free and you usually don't need to tell HMRC. Above that, register for Self Assessment by 5 October after the end of the tax year you started and pay income tax on your profit at your normal rate. Selling your own unwanted belongings isn't trading and is usually tax-free.

• The test is gross income (before costs), added up across all your side hustles

• Platforms report sellers to HMRC, but that isn't a new tax

• Profit is taxed on top of your salary, usually at 20% or 40%

• Class 4 National Insurance only applies to side profits over £12,570

• Rent a Room: up to £7,500 a year tax-free for a lodger in your home

Is your side hustle taxable? Trading vs selling your own things

HMRC only taxes your side income if it falls into a taxable category. For most side hustles that means trading: buying or making things to sell for a profit, or providing a service for payment. HMRC's online-platform guidance groups the common cases like this:

• Selling personal possessions you bought or were given for your own use, such as clothes, furniture, a phone or kitchen kit. You probably don't pay income tax on these, however many items you sell.
• Selling goods you bought intending to resell at a profit, or that you made, even as a hobby. That's probably trading.
• Providing a service, such as dog walking, tutoring, cleaning, gardening, delivery driving or hiring out equipment. That's trading income.
• Creating online content, including advertising income and the value of gifts you receive for promoting products. That's trading income too.
• Renting out land or property, from a whole flat to a spare room or your driveway. That's property income, with its own allowances.

The grey area is where a hobby turns into a business. HMRC uses the "badges of trade" from case law to decide. Its Business Income Manual lists nine: a profit-seeking motive, the number of transactions, the nature of the asset, similar trading activity, changes made to the asset to sell it, the way the sale was carried out, how the purchase was financed, the time between buying and selling, and how you acquired the asset. No single badge decides it.

In practice, a few signs push you firmly into trading: buying stock specifically to resell, repeating the same kind of sale regularly, improving items before selling them, and selling the way a shop would. Clearing your loft once, even in 60 separate listings, doesn't. Someone who starts buying clothes at charity shops to resell on Vinted has crossed the line, as HMRC's own example shows.

The £1,000 trading allowance

The trading allowance lets you earn up to £1,000 a tax year in gross trading income without paying tax on it. It's been in place since 6 April 2017. If all your trading income together is £1,000 or less, you usually don't need to tell HMRC at all. That covers a lot of casual activity: occasional babysitting, a few dog walks, selling a handful of handmade cards.

Three details catch people out:

1. It's gross income, not profit. Selling £1,400 of crafts that cost £700 to make leaves £700 of profit, but your income is £1,400, so you're over the limit.
2. All trading activities count together. £600 from tutoring and £600 from selling upcycled furniture is £1,200 of trading income.
3. It's per person, per tax year (6 April to 5 April), not per calendar year or per platform.

Above £1,000, you can still use the allowance: you either deduct £1,000 from your income, or deduct your actual business expenses, whichever is better. You can't do both for the same activity in the same year. You can't use the allowance against income from your employer or your spouse's or civil partner's employer, or from a company or partnership you're connected to.

There are also reasons to register even when you're under £1,000: to claim relief for a loss, to pay voluntary Class 2 National Insurance, or to qualify for Tax-Free Childcare or Maternity Allowance on self-employed income. Our full guide to the trading allowance covers full and partial relief in detail.

Platform reporting: what changed in 2024

Since 1 January 2024, UK digital platforms have had to collect details about the people selling through them and report their earnings to HMRC every year. A "platform" here means any app or website that lets you sell goods or services: online marketplaces, ride-hailing and delivery apps, freelance sites and short-term letting sites. The first reports, covering calendar year 2024, reached HMRC by 31 January 2025, and the cycle repeats each January.

If you're an individual seller, the platform will ask for your full name, home address, date of birth and National Insurance number. If you let property through a platform, it also needs each property's address. The report shows your total earnings for the calendar year, after the platform's fees and commission, split into quarters. The platform has to give you a copy.

Sellers of goods are left out of the reports if they make fewer than 30 sales in a calendar year and receive less than €2,000 (about £1,700). Hit either figure and you'll be reported. Service providers and property hosts don't have that exclusion.

How platform reporting works

Step 1

You sell through an app or website

Step 2

Platform collects your NI number and details

Step 3

Calendar year ends

31 December

Step 4

Report sent to HMRC

by 31 January

Step 5

You get a copy

Step 6

HMRC compares

with your tax return, if any

HMRC is clear that being reported doesn't automatically mean you owe tax. The report is information, not a bill. A student clearing out their wardrobe through 45 sales will be reported but owes nothing, because they aren't trading. Someone reselling trainers bought for the purpose may well owe tax, report or no report. What the report does is make undeclared trading much easier for HMRC to spot, so if you are trading over £1,000 and haven't registered, now is the time.

One practical point: platform reports run January to December, but tax years run April to April. If you need to declare income, you'll have to re-cut your figures to the tax year. Most platforms let you download a full transaction history.

Selling personal items: when Capital Gains Tax applies

Selling your own belongings is outside income tax, but large sales can fall under Capital Gains Tax. GOV.UK says you may have to pay it if you make a gain on a personal possession sold for £6,000 or more. Below that, any gain is exempt. The limit applies to the total for a set, such as a chess set, matching vases or books by the same author, so you can't split a set to stay under it.

Several common items are exempt whatever the price. Your car isn't liable unless you used it in a business, and nor is anything with a predictable lifespan of under 50 years, which covers all machinery, including antique clocks and watches. Items most likely to be caught are jewellery, paintings, antiques, coins and stamps.

If you sell for between £6,000 and £15,000, a marginal relief limits the gain: take £6,000 away from the sale price and multiply by 1.667, then use the lower of that figure and your actual gain. Everyone also has a CGT annual exempt amount of £3,000. Gains above it are taxed at 18% within your basic rate band and 24% above it.

Tax-free amounts for side income (2026-27)

£1,000

Trading allowance

gross trading income a year

£1,000

Property allowance

e.g. driveway or garage rental

£7,500

Rent a Room Scheme

furnished room in your home

£6,000

Personal possession limit

per item or set, for CGT

£3,000

CGT annual exempt amount

of total gains

Renting out a room or your driveway

Property income has its own rules. If you let furnished accommodation in your own home, such as a lodger or a room on a short-term letting site, the Rent a Room Scheme lets you earn up to £7,500 a year tax-free, or £3,750 each if the income is shared with someone else. Below the threshold the exemption is automatic. Above it you must file a return, and can then choose either to deduct the £7,500 or to declare actual income and expenses.

Other small property income, such as renting out a driveway or a garage, can use the separate £1,000 property allowance. HMRC's allowance guidance says that if your other trading or property income is between £1,000 and £2,500 you should contact HMRC, and above £2,500 you need to register for Self Assessment.

When and how to register

If your gross trading income for a tax year is more than £1,000, you must register for Self Assessment by 5 October after the end of the tax year you started. GOV.UK confirms you can be employed and self-employed at the same time, and you don't need to register before you start trading. Registering as self-employed also sets you up for Class 2 and Class 4 National Insurance where they apply.

A side hustle that starts in June 2026

June 2026

You start selling. Keep records of income and costs from day one

5 April 2027

2026-27 tax year ends; total your gross income

5 October 2027

Deadline to register for Self Assessment if income was over £1,000

Within about around 15 days

Your UTR arrives by post

31 January 2028

File your 2026-27 return online and pay the tax

Registration is online through your Government Gateway account. HMRC then posts your Unique Taxpayer Reference, and you'll need it before you can file. Our sole trader registration guide walks through each screen. Registering late, after 5 October, can mean a failure-to-notify penalty if your tax isn't paid in full by 31 January; see our guide to Self Assessment penalties.

Keep simple records as you go: a spreadsheet of sales and costs, receipts and platform statements is enough for most side hustles. HMRC can ask to see them, and you'll need to keep them for at least 5 years after the 31 January filing deadline. If you invoice customers, our guide to the sole trader invoice shows what to include.

How much tax you'll pay on side income

Your side-hustle profit is added to your other income and taxed at your usual rates. If you have a job, your salary will normally have used your £12,570 Personal Allowance, so every pound of side profit is taxed at your marginal rate: 20% for a basic rate taxpayer and 40% once total income passes £50,270 (England, Wales and Northern Ireland). Scotland sets its own bands and rates for this income, so Scottish taxpayers will see slightly different figures.

National Insurance works differently. Class 4 is worked out on your self-employed profits alone, not combined with your salary. You pay 6% only on profits above £12,570, and 2% above £50,270. So a typical side hustle making a few thousand pounds pays no National Insurance. Class 2 is no longer compulsory: profits above £7,105 earn a State Pension qualifying year automatically, and below that you can pay voluntarily at £3.65 a week. Our guide to self-employed National Insurance has the detail.

You can deduct allowable business expenses, such as materials, platform and payment fees, postage, a share of phone costs and business mileage, if they beat the £1,000 allowance. See allowable expenses for what counts.

Worked examples

All examples use 2026-27 rates for England, Wales and Northern Ireland.

Emma: candles on top of a £35,000 salary. Emma earns £35,000 as an office manager. In 2026-27 she sells £4,200 of handmade candles on Etsy and at craft fairs. Her wax, jars, wicks, stall fees and postage come to £1,300.

Emma's side hustle tax for 2026-27

Step	Figure
Gross trading income	£4,200 (over £1,000, so she must register)
Deduct actual expenses (better than the £1,000 allowance)	−£1,300
Taxable profit	£2,900
Income tax at 20% (salary already uses her Personal Allowance)	£580
Class 4 NI (profit below £12,570)	£0
Total tax on the side hustle	£580

Gross trading income

Figure

£4,200 (over £1,000, so she must register)

Deduct actual expenses (better than the £1,000 allowance)

Figure

−£1,300

Taxable profit

Figure

£2,900

Income tax at 20% (salary already uses her Personal Allowance)

Figure

£580

Class 4 NI (profit below £12,570)

Figure

£0

Total tax on the side hustle

Figure

£580

Emma's bill is under £1,000, so she won't have to make payments on account. Because it's also under £3,000, she can ask for it to be collected through her tax code if she files online by 30 December 2027, spreading it across her salary in 2028-29.

Tom: photography as a higher rate taxpayer. Tom earns £58,000, so he's already a higher rate taxpayer. Weekend portrait photography brings in £3,400, and his only costs are £400. The £1,000 trading allowance beats his actual costs, so his taxable profit is £2,400 and his tax is 40% of that: £960. No National Insurance is due. Tom's side income also raises his adjusted net income; if he received Child Benefit, extra income above £60,000 would increase the High Income Child Benefit Charge.

Priya: a loft clear-out and a painting. Priya sells 45 items of clothing, toys and kitchenware on Vinted for £1,850 in total. Because she made 30 or more sales, Vinted reports her to HMRC, but these were her own possessions, so there's no income tax and nothing to declare. She also sells a painting she bought five years ago for £4,600 for £7,000. Her actual gain is £2,400; the marginal relief gives (£7,000 − £6,000) × 1.667 = £1,667, so her gain is £1,667. That's well within the £3,000 annual exempt amount, so no CGT is due. HMRC's online tool will confirm whether she needs to report it.

Dan: £900 of dog walking. Dan, a student, earns £900 walking neighbours' dogs. That's under £1,000, so full relief applies: no tax and no need to tell HMRC, though he should keep a simple record of what he earned.

Knock-on effects to watch

Side income can affect more than your tax bill:

• Student loans. If you file a return, HMRC works out student loan repayments on your total income above your plan's threshold, so side profits can mean an extra repayment. See our guide to student loan deductions.
• Child Benefit. Side profits count towards the £60,000 adjusted net income threshold for the High Income Child Benefit Charge.
• Payments on account. If your Self Assessment bill is more than £1,000 and less than 80% of your tax was collected at source, you'll have to pay towards next year's bill in advance. Our payments on account guide explains.
• Universal Credit and other benefits. Self-employed earnings are reported monthly and reduce the award.
• VAT. If a side business grows so its taxable turnover passes £90,000 in 12 months, it must register for VAT.
• Making Tax Digital. From April 2027, people with qualifying self-employment and property income over £30,000 must keep digital records and send quarterly updates; the limit falls to £20,000 from April 2028. Most side hustles are well below this, but a busy one plus rental income may not be.
• Your employment contract. Some employers restrict second jobs or competing work, so check before you start.

Common mistakes

Avoid these side hustle tax mistakes

0/6

• Using profit instead of gross income for the £1,000 test
• Treating each platform separately instead of adding up all trading income
• Assuming a platform report means you owe tax, or that no report means you don't
• Claiming actual expenses and the trading allowance for the same activity
• Copying calendar-year platform totals onto a tax return without re-cutting to 6 April – 5 April
• Waiting for HMRC to get in touch instead of registering by 5 October

Share Print

Official HMRC and GOV.UK links

• Check if you need to tell HMRC about online incomeHMRC's tool and examples
• Selling goods or services on a digital platformPlatform reporting rules since 2024
• Tax-free allowances on property and trading incomeThe £1,000 allowances
• Register for Self AssessmentRegister by 5 October after the tax year
• Capital Gains Tax on personal possessionsThe £6,000 rule
• Rent a room in your home£7,500 tax-free

What to do next

Add up everything your side activities brought in since 6 April. If it's £1,000 or less and comes from trading, keep a note and carry on. If it's more, register as a sole trader before 5 October after the end of the tax year you started, start a simple spreadsheet of income and costs, and read our Self Assessment guide before January. To check whether your online selling actually makes money after fees, try the marketplace profit calculator.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

How much can I earn from a side hustle before paying tax in the UK?

Up to £1,000 a tax year in gross trading income is covered by the trading allowance, so it's tax-free and you usually don't need to tell HMRC. Above that, you must register for Self Assessment and pay tax on your profit at your normal income tax rate, because your salary will usually have used up your Personal Allowance already.

Do I pay tax if I sell my old clothes on Vinted or eBay?

Usually not. Selling your own unwanted possessions isn't trading, so there's no income tax however many items you sell. Capital Gains Tax only becomes possible if a single item or set sells for £6,000 or more and you make a gain. Buying things to resell, or making items to sell, is different: that's trading.

Will HMRC know about my side hustle?

Increasingly, yes. Since 1 January 2024 online platforms such as marketplaces, gig apps and holiday-let sites have had to report sellers' details and earnings to HMRC each January. Sellers of goods are left out only if they make fewer than 30 sales and receive less than €2,000 (about £1,700) in a calendar year. Being reported doesn't mean you owe tax.

When do I need to register a side hustle with HMRC?

If your gross trading income in a tax year (6 April to 5 April) is more than £1,000, register for Self Assessment by 5 October after the end of the tax year you started. For income earned in the 2026-27 tax year, that's 5 October 2027. You then file online and pay any tax by 31 January 2028.

Do I pay National Insurance on a side hustle?

Only if your side-hustle profit is over £12,570. Self-employed Class 4 National Insurance is charged on profits above that limit at 6%, regardless of your salary. Most side hustles make less, so they pay income tax only. Profits above £7,105 also earn a State Pension qualifying year without paying Class 2.

Has the £1,000 limit gone up to £3,000?

Not yet. In March 2025 the government announced it would raise the Self Assessment reporting threshold for trading income to £3,000 within this Parliament. No start date had been set when we checked in October 2026, and the trading allowance itself is still £1,000, so today's rules apply.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 12 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Check if you need to tell HMRC about your income from online platforms — HMRC / GOV.UK · accessed 12 October 2026
2. 2.Selling goods or services on a digital platform — HMRC / GOV.UK · accessed 12 October 2026
3. 3.Tax-free allowances on property and trading income — HMRC / GOV.UK · accessed 12 October 2026
4. 4.Capital Gains Tax on personal possessions — HMRC / GOV.UK · accessed 12 October 2026
5. 5.Rent a room in your home — GOV.UK · accessed 12 October 2026
6. 6.BIM20205 — Meaning of trade: badges of trade: summary — HMRC Business Income Manual · accessed 12 October 2026
7. 7.Boost for side-hustlers as 300,000 people to be taken out of tax returns, government announces — HM Treasury / GOV.UK · accessed 12 October 2026
8. 8.Set up as a sole trader — GOV.UK · accessed 12 October 2026