Do You Side Hustle?

If you receive income above £1,000 from any side hustles, then you need to notify HMRC of this before they find you and drop you a line. 

We will all have different reasons why we decide to start up something new to bring us in some extra pennies. Maybe to save towards a holiday, a weekend away, or for that next car or house move. When self-employed earnings rise above the trading allowance they must be declared to HMRC.

The trading allowance is an amount of up to £1,000 per tax year which you can use against any gross income made from self-employment, casual or miscellaneous sources (such as babysitting or selling goods through a website).

Starting a side line can go one of two ways. It will either bomb out and come to nothing, or it will grow wings and fly. The latter is the one that can catch you out. With payments made and received online including electronic bank transfers, there is a digital footprint on your earnings. Keeping a record of your extra earnings and being aware of the £1,000 trading allowance limit, will help you avoid getting into trouble. If you do get a letter from HMRC, the worst thing you can do is ignore it.

Here’s a clear breakdown of the current rules and upcoming changes that could make things easier for small earners.

✅ Earn Up to £1,000 a Year – No Need to Declare

Thanks to the trading allowance, you can earn up to £1,000 per tax year from self-employment or casual income without needing to:

• Register with HMRC

• File a tax return

• Pay any tax

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This applies to income from things like:

• Selling goods online

• Pet sitting, tutoring, gardening

• Freelance gigs or content creation

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⚠️ Earn £1,001 to £2,999 – New Reporting System Coming

From 2029, HMRC plans to introduce a simplified digital reporting system for people earning between £1,001 and £2,999 from side hustles. You won’t need to file a full Self Assessment tax return. Instead, you’ll:

• Log into a new HMRC portal

• Enter your total side hustle income

• Pay any tax due directly online

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Note: You’ll still pay tax on anything over £1,000, and it’s not yet clear whether you’ll be able to claim expenses through this system.

❗ Earn Over £3,000 – Full Tax Return Required

If your side hustle income exceeds £3,000, you’ll still need to:

• Register for Self Assessment

• File a tax return

• Pay tax on your profits (after allowable expenses)

  
  

🧾 Example: How It Works

Let’s say you earn £2,500 from tutoring and photography:

• You’ll report this via the new digital service (once available).

• You’ll pay tax on £1,500 (£2,500 minus the £1,000 allowance).

• If you’re a basic rate taxpayer (20%), that’s £300 in tax.

💡 Need Help Tracking Your Side Hustle Income?

If you’re unsure how to track your earnings, claim expenses, or prepare for the upcoming changes, we can help. As bookkeepers, we offer tailored support for freelancers, creatives, and small business owners.

📩 Get in touch today to make sure your side hustle stays stress-free and compliant!