With more people than ever earning extra income through side hustles, from online selling to freelance work, it’s important to understand when you need to report that income to HMRC.
The good news is that the rules are fairly straightforward once you know the basics.
The £1,000 Trading Allowance Explained
HMRC provides a £1,000 trading allowance for small amounts of additional income.
If your total income from side hustles is £1,000 or less within a tax year (6 April to 5 April), you usually do not need to declare it or pay tax on it.
However, if your income exceeds £1,000, you will typically need to:
- Register as a sole trader
- Submit a Self Assessment tax return
- Pay tax on your profits (not your total income)
It’s important to note that the £1,000 threshold applies to total income, not profit.
Side Hustles You May Need to Declare
If you earn over £1,000 in a tax year from any of the following, you will usually need to report it to HMRC:
- Online selling or reselling (e.g. eBay, Vinted, Etsy)
- Content creation (YouTube, TikTok, blogging)
- Freelance or consultancy work
- Gig economy jobs (e.g. Uber, Deliveroo)
- Domestic services (cleaning, gardening, dog walking)
- Hiring out tools, equipment, or other assets
Income That Is Usually Not Taxable
Some types of income are generally not taxable or do not need to be declared (provided they fall within normal limits):
- Selling personal belongings (not for profit)
- Casual, one-off help for friends or family
- Gambling or betting winnings
- Bank switching incentives or rewards
Be careful! If your activity starts to look like a business (for example, buying items specifically to resell), HMRC may class it as trading.
A Few Key Things to Watch
- The £1,000 allowance is across all your side income combined, not per activity
- You may still need to file a return if you are already in Self Assessment
- If your income exceeds £1,000, you can either:
- Deduct the £1,000 allowance, or
- Claim actual business expenses (whichever is more beneficial)
Need Help With Your Tax Return?
If you’re unsure whether your side hustle income needs to be declared, Davenports can help.
We can guide you through:
- Sole trader registration
- Self Assessment tax returns
- Claiming the right expenses
- Staying compliant with HMRC rules
This helps you avoid unnecessary stress – and any unexpected tax bills.
