How much money can I make from my side hustle before I have to pay tax?

Whether you’re making extra cash from a side hustle, selling unwanted clothes on Vinted or running a small online business, it’s important to understand when your earnings become taxable.

As HMRC gains access to more information about sales made through such platforms, including eBay, Depop or Amazon, more people are being urged to understand their tax obligations and avoid an unexpected tax bill.

What counts as a side hustle?

A side hustle is a way of earning extra money outside your main job, usually on a self-employed or freelance basis.

It could be anything – perhaps selling items you’ve made or bought through online marketplaces, providing services such as tutoring, dog walking or delivery driving, or earning money from sponsored online content.

Not all extra income is taxable. Selling unwanted personal possessions – such as clearing out your cupboards – doesn’t usually need to be reported to HMRC.

However, regularly selling goods for profit or providing services for payment may need to be declared.

A side hustle is different from a second job. If you work for an employer, such as in a bar or shop, you’ll usually be paid through PAYE, with tax deducted automatically. With a side hustle, you are generally responsible for declaring any taxable income yourself.

When do you need to tell HMRC about your side hustle?

If you earn more than £1,000 a year from side hustles, you may need to register for self-assessment and report your income to HMRC.

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The £1,000 limit is known as the trading allowance and applies to your total income from all side hustles before expenses are deducted. It is not a separate allowance for each activity, and it is not £1,000 of profit.

However, earning more than £1,000 does not automatically mean you will owe tax. Whether you have tax to pay depends on your overall income, expenses and any tax-free allowances you’re entitled to.

If you’re unsure whether you need to file a tax return, HMRC has a free online checker that explains what you need to do. More help can be found by checking out HMRC’s Help for Hustles campaign.

Kevin Hubbard, HMRC’s director of small business & individuals, says: “If you’re earning more than £1,000 a year from your side hustle it’s important to understand your tax responsibilities, and HMRC wants to make that as straightforward as possible.

“You can check if you need to do a self-assessment tax return by using the tool on Gov.UK. It takes minutes to use, tells you exactly what you need to do and means no unexpected tax bills later.”

Self-assessment deadlines and keeping records

Anyone new to self-assessment for the 2025/26 tax year must register by 5 October 2026.

They must then file their online tax return and pay any tax due by 31 January 2027.

Keeping accurate records is essential. You should keep details of sales, purchase costs, postage, platform fees and any other expenses linked to your side hustle.

Good records can help if HMRC asks questions and may also reduce your tax bill by ensuring you claim all allowable business expenses.

HMRC is keeping a closer eye on online sales

If you should have registered for self-assessment but didn’t, HMRC could charge penalties and interest on any tax owed. The longer payment is delayed, the more the bill could increase.

It is also becoming more difficult to fly under the radar. HMRC now receives more information from online marketplaces under international reporting rules, giving it greater visibility of people who may be earning taxable income through online sales.

Andy Wood, tax expert at Tax Barrister UK, says: “There is a common misconception that selling through platforms such as Vinted, eBay or Depop is largely invisible to HMRC, but that is no longer the case. HMRC now receives significantly more information from online marketplaces and can use this data to identify individuals who may have tax obligations they have not declared.

“If you are simply selling unwanted personal belongings (usually at a loss), there is generally no tax to pay. The concern arises when individuals are regularly buying and selling goods, generating profits, or operating a side hustle.”

The planned £3,000 reporting threshold

In March 2025, the Government announced plans to increase the self-assessment reporting threshold for trading income from £1,000 to £3,000. It estimates this could mean around 300,000 people no longer need to complete a tax return.

However, this change has not yet come into force and is expected before the end of the current Parliament, which means by 2029.

Crucially, the change will not increase the tax-free trading allowance. Trading income above £1,000 may still be taxable. Instead, it will mean some people with trading income of up to £3,000 will no longer need to file a self-assessment return, unless they need to complete one for another reason, such as rental income, capital gains or savings income.

The Government has said it will introduce a simplified online service for people who still owe tax on trading income but no longer need to complete a self-assessment return.

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