Millions of people earn extra money alongside their main job through freelancing, online selling, tutoring, delivery work, content creation and other side hustles. If you earn money outside your regular employment, you may need to report that income to HM Revenue and Customs (HMRC), even if your side business is small.

The main rule to understand is the £1,000 trading allowance. If your total gross trading income from relevant activities is £1,000 or less during a tax year, you will not usually need to tell HMRC about it. If your gross income is more than £1,000, you will generally need to check whether you must register for Self Assessment and declare the income.

The £1,000 allowance is not a universal exemption for every type of extra money. It applies to qualifying trading and certain miscellaneous income. Employment wages, dividends, savings interest, rental income and profits from selling personal possessions can follow different tax rules.

Official guidance: Tax-free allowances on property and trading income.

1. What is the £1,000 trading allowance?

The trading allowance is a tax allowance for individuals who earn qualifying income from self-employment, casual services and certain other trading activities. It can cover activities such as freelance work, babysitting, gardening, tutoring, selling services or hiring out personal equipment.

If your total qualifying gross trading income is £1,000 or less in a tax year, you will usually not need to report that income to HMRC. There are exceptions, including situations where you must submit a tax return for another reason or cannot use the allowance.

If your gross income exceeds £1,000, you can generally choose between deducting the trading allowance and deducting allowable business expenses when calculating taxable profits. You cannot normally claim both the £1,000 trading allowance and actual expenses against the same income.

The allowance is calculated on gross income, not profit. For example, if you receive £1,500 from freelance projects and spend £400 on eligible business expenses, your gross income is still £1,500. You must consider the reporting rules before deciding how to calculate your taxable profit.

Official guidance: How the trading allowance works.

2. Do you need to declare side hustle earnings over £1,000?

If your total gross income from qualifying trading activities exceeds £1,000 during the tax year, you should check whether you need to register for Self Assessment and report the income to HMRC.

For example, a person earning £2,400 from freelance graphic design alongside a full-time job will generally need to consider Self Assessment. The fact that their employer already deducts Income Tax from their salary does not automatically cover the tax position of the freelance work.

The reporting requirement is separate from the question of whether tax is ultimately payable. Your taxable profit may be reduced by the trading allowance or allowable expenses, and your Personal Allowance and other income can affect the final tax calculation.

These examples assume the income is from qualifying trading activities. Other income types, including rent, employment income and personal possessions sold for a profit, can be subject to different rules.

Official tool: Check whether you need to tell HMRC about extra income.

3. What counts as a side hustle?

A side hustle is an informal term for income-generating activity outside your main job or regular source of income. HMRC does not treat every activity described as a side hustle in the same way. The correct tax treatment depends on the nature of the income.

Examples of activities that may generate trading income include:

• Freelance web development, graphic design or software work.
• Online tutoring, coaching or private lessons.
• Babysitting, gardening, cleaning or other casual services.
• Food preparation, baking or selling handmade products.
• Delivery driving or other gig-economy services.
• Creating videos, podcasts or other monetised online content.
• Social media influencing, sponsored posts or affiliate marketing.
• Buying goods to resell for profit.
• Hiring out personal equipment in qualifying circumstances.

If you make money from an online platform, you should consider all qualifying trading income from your activities rather than looking at each platform separately. Income from several side hustles may need to be added together when checking the trading allowance.

Official guidance: Income from online platforms.

4. How does the £1,000 allowance work if you have several side hustles?

The trading allowance is generally shared across qualifying trading and relevant miscellaneous income for an individual. It is not a separate £1,000 allowance for every app, customer or side business.

Suppose you earn £650 from freelance work, £300 from tutoring and £250 from gardening services during the same tax year. Your combined gross trading income is £1,200, so you have exceeded the £1,000 threshold.

In that example, you should check whether you need to register for Self Assessment and declare the income. You may be able to deduct the £1,000 trading allowance when calculating taxable profits, or claim allowable expenses instead, depending on which method is more suitable.

Keep a record of the receipts from each activity so that you can calculate the combined amount accurately.

5. Is the £1,000 allowance based on revenue or profit?

The threshold is based on gross income, which means the total qualifying receipts before deducting expenses or other allowances.

Consider a freelance worker who receives £2,000 from customers and spends £1,300 on eligible business expenses. The gross income is £2,000, even though the amount remaining after expenses is £700. The person has exceeded the £1,000 gross income threshold and must check the reporting rules.

This distinction is important because people sometimes assume that they only need to report their income when their profit exceeds £1,000. That is not how the trading allowance threshold works.

The final tax calculation may use allowable expenses or the trading allowance, depending on the method selected and the rules that apply. You cannot normally deduct actual expenses as well as the trading allowance against the same trading income.

Official explanation: Gross income and the trading allowance.

6. How much tax will you pay on side hustle earnings?

The amount of tax you pay depends on your taxable profits, other income, available Personal Allowance and applicable tax rates. The trading allowance does not mean that every person with side hustle income automatically pays tax on all receipts above £1,000.

If you have a regular job, your employment income may already use some or all of your Personal Allowance. Your taxable side hustle profits can then be added to your other taxable income when calculating the total Income Tax due.

For example, assume you earn £3,000 in gross qualifying freelance income and choose the £1,000 trading allowance instead of deducting actual expenses. The illustrative amount remaining after the allowance is £2,000. That amount is considered alongside your other taxable income when HMRC calculates your tax liability.

If your total income remains within your available Personal Allowance, you may not have Income Tax to pay. If your employment income already uses the allowance, some or all of your additional taxable profits may be taxed at the applicable rate.

National Insurance contributions can also depend on your self-employment profits and circumstances. Do not assume that the Income Tax calculation automatically settles every possible liability.

Official rates: Current Income Tax rates and allowances.

7. Should you use the trading allowance or claim expenses?

If your gross trading income is above £1,000, you may be able to choose between deducting the trading allowance and claiming allowable business expenses. The better method depends on your actual costs and the rules for your type of activity.

The trading allowance can be straightforward when you have low expenses. Claiming actual expenses may be more beneficial when you spend more than £1,000 on eligible costs, but you need records to support the deductions.

For example, if your qualifying receipts are £5,000 and your allowable expenses are £1,800, claiming actual expenses may give a larger deduction than the £1,000 trading allowance. If your expenses are only £200, the allowance may give you a larger deduction.

These are simplified examples. The eligibility of expenses and the interaction with other income sources can affect the calculation. Compare the methods before completing your tax return.

Official guidance: Choosing between the trading allowance and expenses.

8. How to register for Self Assessment

If your side hustle income means you need to submit a tax return and you have not previously registered, you must tell HMRC by the relevant deadline. For a tax return covering the previous tax year, the usual registration deadline is 5 October following the end of that tax year.

For example, if you earned reportable side hustle income during the 2025–26 tax year, which ended on 5 April 2026, the standard registration deadline is 5 October 2026 if you need to register for Self Assessment for that year.

To register:

1. Check whether you need to tell HMRC about your additional income.
2. Open the official Self Assessment registration page.
3. Choose the route that matches your circumstances, such as self-employment.
4. Provide the personal and business details requested.
5. Follow HMRC instructions to obtain or reactivate your Self Assessment registration.
6. Keep your Unique Taxpayer Reference and online account details safe.

If you have registered for Self Assessment before but did not submit a return for the most recent tax year, you may need to reactivate your account rather than create a new registration.

Official registration service: Register for Self Assessment.

9. What are the important UK tax deadlines?

The deadline depends on the tax year in which you earned the income and whether you are registering for the first time or already submit tax returns.

These are the standard deadlines and may not cover every circumstance. If you miss a deadline, contact HMRC and follow the applicable instructions. Penalties can apply when a required return is late or tax remains unpaid.

Official deadline guidance: Self Assessment deadlines.

10. Do online platforms report your side hustle income to HMRC?

Some digital platforms collect seller information and report information about relevant transactions to HMRC under platform reporting rules. This may include information about people selling goods or providing services through online marketplaces and other platforms.

A platform report does not automatically mean that you owe tax. HMRC still needs to consider the nature of the activity, the amount of income, available allowances and whether you are selling personal possessions or trading for profit.

For example, selling unwanted personal belongings is not automatically the same as buying goods to resell as a business. The tax treatment can differ depending on how the items were acquired, why they were sold and whether a taxable gain or trading profit arises.

If a platform contacts you about information being shared with HMRC, keep your sales records and check the official guidance. Do not ignore a tax reporting obligation simply because the platform has already provided information to HMRC.

Official guidance: Online platform income reporting rules.

11. What if you sell personal belongings online?

Selling personal belongings is not always a side hustle for tax purposes. If you occasionally sell unwanted possessions, such as used clothes, books or household items, the proceeds are not automatically treated as self-employment income.

The position can change if you buy items specifically to resell them for profit, regularly trade goods or sell personal possessions for more than they cost in circumstances where Capital Gains Tax rules may apply.

The £1,000 trading allowance should not be used as a universal rule for all online sales. Check whether the activity is trading income, a capital disposal or another type of income before deciding whether you need to report it.

Official information: Capital Gains Tax on personal possessions.

12. What records should you keep?

Good records make it easier to calculate gross income, identify allowable expenses and complete a tax return accurately. You should keep records even when your income is below the trading allowance threshold.

• Invoices and receipts from customers.
• Bank statements showing side hustle payments.
• Platform statements and payment processor records.
• Receipts for equipment, materials and other business expenses.
• Mileage records where vehicle costs are relevant and allowable.
• Records of refunds, cancellations and returned goods.
• Copies of tax returns and HMRC correspondence.

Keep personal and business transactions clearly identifiable. If you use one bank account for both, maintain a record that shows which receipts and costs relate to the side hustle.

If you register for Self Assessment, follow HMRC record-keeping requirements for your circumstances and keep the records for the required period.

Official guidance: Records you must keep if you are self-employed.

13. Common mistakes to avoid

• Looking only at profit: The £1,000 threshold is based on gross qualifying income before expenses.
• Applying the allowance to each platform: Add together relevant income from your qualifying activities instead of assuming each app has a separate allowance.
• Assuming the allowance applies to every income type: Employment, savings, dividends, property and personal possessions can follow different rules.
• Assuming no tax return means no record keeping: Keep records of receipts and expenses even when you may not need to report the income.
• Claiming the allowance and expenses together: You generally need to choose between the trading allowance and actual allowable expenses for the relevant income.
• Ignoring registration deadlines: Check the 5 October notification deadline if you need to register for a tax return for the previous tax year.
• Assuming platform reporting settles your tax: You remain responsible for checking whether you must declare your income and pay any tax due.

14. Frequently asked questions

Conclusion

If you earn money from freelancing, online selling, content creation, tutoring or another side hustle, the main threshold to check is £1,000 in gross qualifying trading income per tax year. If your total exceeds that amount, you should check whether you need to register for Self Assessment and declare the income.

The £1,000 trading allowance can reduce taxable profits, but it does not remove every reporting obligation and does not apply to every kind of income. Your actual tax liability depends on the nature of the activity, your expenses, other income and available allowances.

Keep clear records, check the official HMRC income checker and register by the relevant deadline if required. If you earned reportable side hustle income during 2025–26 and need to register for a tax return for the first time, the usual notification deadline is 5 October 2026.