If your side hustle brings in £1,000 or less in a tax year (before expenses), the trading allowance usually makes it tax-free and you don't need to tell HMRC. Above £1,000 you must register for Self Assessment, and you pay Income Tax plus Class 4 National Insurance on the profit — stacked on top of your salary, so it's taxed at your highest rate. Enter your figures above (salary in the "other income" box) to see the real number.
- Under £1,000 gross: covered by the trading allowance — usually nothing to report, nothing to pay.
- Over £1,000 gross: register for Self Assessment by 5 October 2027 (for the 2026/27 tax year).
- You're taxed on profit — income minus expenses, or minus the flat £1,000 allowance if that's better.
- Side-hustle profit sits on top of your salary, so a basic-rate employee loses 20p of each extra pound and a higher-rate employee 40p. Class 4 NI (6%) only starts once your self-employed profit alone tops £12,570 — your salary doesn't count towards that threshold.
- Online platforms (Vinted, eBay, Etsy, Uber, Airbnb…) now report seller income to HMRC every January — the "side hustle tax" headlines are about reporting, not a new tax.
Is there a new "side hustle tax"?
No — the rules on what you owe haven't changed. What changed is that digital platforms must now send HMRC an annual report of what their sellers earned (generally anyone with 30+ sales or roughly £1,700 in a year), so undeclared side income is far more visible than it used to be. If you've been earning over £1,000 and not declaring it, the safest move is to register and bring your returns up to date before HMRC writes first.
How side hustle tax is calculated
- Work out profit — side-hustle income minus allowable expenses, or minus the £1,000 trading allowance (whichever leaves more in your pocket — the calculator compares both if you switch the dropdown).
- Stack it on your salary — your employer's PAYE has already used your Personal Allowance and some of your basic-rate band, so side-hustle profit is taxed from where your salary left off: 20%, 40% or 45%.
- Add Class 4 NI — but only past £12,570 of profit. The NI threshold looks at your self-employed profit on its own, so most sideline hustles pay none. Once profit itself passes £12,570, NI is 6% (2% above £50,270 of profit).
Worked example — £30,000 salary + £5,000 side hustle
| Step | Calculation | Amount |
|---|---|---|
| Side hustle income | freelance design work | £5,000 |
| Expenses | software, phone, travel | −£800 |
| Better off with £1,000 allowance | £1,000 > £800, so deduct that instead | −£1,000 |
| Taxable profit | £5,000 − £1,000 | £4,000 |
| Income Tax | £4,000 × 20% (still in basic rate) | £800 |
| Class 4 NI | profit under £12,570 on its own | £0 |
| Total owed via Self Assessment | £800 |
Rule of thumb: set aside 20p of every £1 of side-hustle profit if you're a basic-rate employee, 40p if higher-rate — and step up to 26p/42p only once the hustle's profit by itself passes £12,570, when Class 4 NI joins in.
When and how do I pay?
Register for Self Assessment on gov.uk by 5 October after the tax year ends, file the return and pay by 31 January 2028 for 2026/27 income. If the bill tops £1,000, HMRC usually also asks for payments on account towards the following year. Nothing is deducted as you go — the setting-aside is on you.
Frequently asked questions
Do I pay tax on a side hustle under £1,000?
Usually no. The £1,000 trading allowance covers gross income (before expenses) from all your casual trading combined. Note it's £1,000 of income, not profit — £1,200 of sales with £500 of costs still needs reporting.
Does selling my old clothes or clutter count as a side hustle?
No. Selling your own possessions for less than you paid isn't trading and isn't taxable, no matter the amount. Tax only enters the picture when you buy or make things in order to sell them — see our Vinted tax calculator for the full distinction.
Will my employer find out I have a side hustle?
Not from Self Assessment itself. Declaring self-employed income doesn't change your tax code by default, and HMRC doesn't tell employers. Just check your employment contract allows outside work.
What if my side hustle makes a loss?
A genuine trading loss can usually be set against your other income (like your salary) to reduce your overall tax — but you can't use the £1,000 trading allowance and claim a loss at the same time. Keep records; loss relief is one of the first things HMRC checks.
Is the reporting threshold changing?
The government has announced plans to raise the Self Assessment reporting threshold for trading income from £1,000 to £3,000 later this parliament, with a simpler online way to pay small amounts. The tax itself doesn't change — only how you report it. Until it's law, the £1,000 rule stands.