Photo: BSEINDIA / Wikimedia Commons, CC BY-SA 3.0, cropped

Side hustle tax basics in the UK: what to report (educational)

By FastBuySale Newsroom · 9 Nov 2026 · 7h ago

Why this matters now

More people than ever earn extra money from online selling, freelancing, delivery apps, renting out a parking space or making and selling crafts. Since January 2024, digital platforms have had to collect and report information about sellers to HMRC, and the first reports were sent in early 2025. Many people received emails from platforms asking for their National Insurance number or tax details and worried that they owed tax.

This guide explains, in an educational way, what side hustle income you need to report and what you do not, using HMRC's published guidance. Figures apply to the 2026 to 2027 tax year, which runs from 6 April 2026 to 5 April 2027.

Trading or selling personal items?

The key question is whether you are trading. HMRC's guidance says selling your own personal possessions, such as clothes you no longer wear or old furniture, is unlikely to be trading. You usually sell those items for less than you paid, so there is no profit to tax. In rare cases, selling valuable items such as antiques or art for more than £6,000 each can involve Capital Gains Tax.

Trading is different. Signs that you are trading include buying items to resell, making goods to sell, selling regularly with the aim of making a profit and providing services such as tutoring, dog walking or design for payment. HMRC calls these the badges of trade.

The trading allowance

If your gross trading income, meaning total income before expenses, is £1,000 or less in a tax year, the trading allowance covers it. You do not need to tell HMRC or pay tax on it. If your gross trading income is more than £1,000, you need to register for Self Assessment and report it. You can then either deduct the £1,000 allowance or deduct your actual expenses, but not both.

The property allowance

There is a separate £1,000 property allowance for income from land and property, such as renting a driveway or parking space or occasional short-term letting. Rent-a-room relief, which lets you earn up to £7,500 a year tax-free from letting furnished accommodation in your main home, is a different relief.

Digital platform reporting

Since 1 January 2024, digital platforms such as online marketplaces and gig apps must collect sellers' details and report their income to HMRC each year. Sellers who make fewer than 30 sales of goods and receive less than about £1,700 a year are generally excluded from reporting for goods sales. This is a reporting threshold, not a tax threshold. You may owe tax below it, and you may owe none above it if you are only selling personal items.

Registering for Self Assessment

If you need to report, register for Self Assessment as self-employed by 5 October after the end of the tax year in which you started. For example, if you started trading in July 2026, the tax year ends on 5 April 2027 and you must register by 5 October 2027. The online return is then due by 31 January 2028, along with any tax owed.

What tax you pay

Your side hustle profit is added to your other income, such as salary. Income Tax is charged at your marginal rate after the personal allowance of £12,570. Class 4 National Insurance is charged on self-employed profits above £12,570 at 6% up to £50,270 and 2% above, for 2026 to 2027. If you have a salary that already uses your personal allowance, your side profit is usually taxed at 20% or more from the first pound above the trading allowance.

Worked example: a reseller

Hannah has a full-time job earning £32,000. She buys clothes at charity shops and car boot sales and resells them online. In 2026 to 2027, her sales total £4,800, and she spent £1,600 on stock and £300 on postage and packaging. Her actual expenses of £1,900 are more than the £1,000 allowance, so she deducts them, leaving a profit of £2,900. Her salary already uses her personal allowance, so the profit is taxed at 20%, which is £580 of Income Tax. Her total self-employed profit is below £12,570, so no Class 4 National Insurance is due. She registers by 5 October 2027 and files by 31 January 2028.

Worked example: occasional decluttering

Tom sells 40 items of his own old clothes and furniture on two platforms during 2026, receiving £1,900. Because he passed the reporting thresholds, one platform reports his details to HMRC. However, he is selling his own possessions for less than he paid, so this is not trading and he has no tax to pay. He keeps a note of what he sold in case HMRC asks.

Allowable expenses

If you deduct actual expenses, they must be wholly and exclusively for the business. Examples include stock, materials, packaging and postage, platform and payment fees, a share of phone and internet costs, equipment and travel for the business. You cannot claim personal spending.

Payments on account and deadlines

If your tax bill through Self Assessment is more than £1,000 and less than 80% of your tax is collected at source, HMRC asks for payments on account toward the next year, due on 31 January and 31 July. Missing the 31 January filing deadline brings a £100 penalty, even if no tax is owed.

Records to keep

Keep records of sales, invoices, receipts, bank statements and mileage. HMRC requires records for at least five years after the 31 January submission deadline of the relevant tax year. A spreadsheet or simple bookkeeping app makes this much easier.

What about tax on savings and other income?

Side hustle income is separate from savings interest and dividends, which have their own allowances. If you have several income types, your Self Assessment return brings them together.

Side hustles that involve services

The same rules apply to services as to goods. A weekend photographer, an online tutor, a dog walker, a cleaner or a freelance designer who earns more than £1,000 of gross income in a tax year from these activities generally needs to register for Self Assessment. If you provide services through an app, such as delivery or ride-hailing, the platform also reports your income to HMRC. Some service side hustles need licences or insurance, such as dog boarding licences from the local council.

Students, pensioners and people on benefits

Students and pensioners follow the same tax rules as everyone else: income above the allowances is taxable, although many students have unused personal allowance so may owe little or no Income Tax. People receiving means-tested benefits such as Universal Credit must report self-employed earnings to the Department for Work and Pensions, which can affect their payments. Student visa holders cannot be self-employed in the UK.

If you have not reported in past years

If you realise you should have reported side income in earlier years, HMRC offers ways to put things right, including registering late or using its digital disclosure service. Coming forward before HMRC contacts you usually leads to lower penalties than waiting to be found through platform data.

Making Tax Digital

Making Tax Digital for Income Tax is being introduced for sole traders and landlords with qualifying income above set thresholds, starting at more than £50,000 from April 2026, then lower levels in later years. Qualifying income is gross income from self-employment and property combined. Most small side hustles are well below these thresholds, but if yours grows, check whether you need compatible software and quarterly updates.

Common misunderstandings

"Platforms report me, so I must owe tax." Reporting is about information, not tax due.

"I only need to report profits over £1,000." The allowance applies to gross income, not profit.

"Cash payments do not count." All trading income counts, however paid.

Where to check

HMRC's online tool to check whether you need to tell it about income from online platforms takes a few minutes and covers most side hustles. This article is general information about UK tax and is not tax or financial advice.

💬 Join the discussion on this article →

More in Finance · Trending News · Browse local deals