Can you be employed and self-employed at the same time?

Yes. You can have a job and run your own business at the same time, and many people do. Your employer keeps taxing your wages through PAYE, and you report the business profits on a Self Assessment tax return each year.

Is it legal to have a job and a business?

It is. GOV.UK’s working for yourself guidance says “You can run a business and be employed at the same time”, giving the example of a day job with a business in the evenings.

Two practical checks come first:

• Your employment contract. Some contracts restrict outside work, competing with your employer or using its clients. Read yours before you start.
• Your status with each customer. Being self-employed depends on how you work for each engager, not on having a job elsewhere. Our guide to employment status explains the tests.

Do you need to tell HMRC about side income?

Only once your gross trading income passes £1,000 in a tax year. The trading allowance gives £1,000 a year tax-free from self-employment, casual work and hiring out personal equipment.

The allowance is one £1,000 for all your trading activities, not one per business. You cannot use it for income from your own employer, or your spouse’s or civil partner’s employer. Budget 2026 confirmed the allowance and the Self Assessment reporting threshold both rise to £3,000 from 6 April 2027. See claiming the trading allowance.

How do you register?

You register as a sole trader through HMRC’s Self Assessment service. The steps are:

1. Check you need to. Gross trading income over £1,000 means yes.
2. Register by 5 October after the end of the tax year you started. For a business started in 2025/26, GOV.UK’s registration page gave a deadline of 5 October 2026.
3. Get your Unique Taxpayer Reference by post, then set up your online account.
4. Keep records of sales and expenses from day one.
5. File and pay by 31 January after the tax year ends.

Our guide on how to register as a sole trader has more detail.

How is the tax worked out?

Your wages and profits are added together for Income Tax. Because PAYE normally gives your £12,570 personal allowance to your job, profits usually start at 20% and can push you into the 40% band above £50,270.

National Insurance is different. You pay Class 1 on wages through payroll and Class 4 on profits, worked out separately:

• 6% on profits from £12,570 to £50,270
• 2% on profits above £50,270
• no Class 2 to pay if profits are £7,105 or more, as contributions are treated as paid

People who pay both Class 1 and Class 4 have an annual maximum, set out in HMRC’s National Insurance Manual at NIM24170. HMRC applies it when it calculates your Class 4.

Worked example for 2026/27

You earn a £35,000 salary and make £8,000 profit from weekend photography. Your job uses your personal allowance, so the £8,000 is taxed at 20%: £1,600 Income Tax. Your profits are below the £12,570 Class 4 threshold, so there is no Class 4. Your total income of £43,000 stays in the basic rate band.

Run your own figures in the self-employed take-home calculator.

Can you pay through your tax code?

Often, yes. HMRC can collect a Self Assessment bill through your PAYE code if all three apply:

• the bill is under £3,000
• you already pay tax through PAYE
• you file online by 30 December, or on paper by 31 October

The £1,600 in the example qualifies. Read more in paying Self Assessment through your tax code.

Which applies to you?

• If side income is £1,000 or less: you do not need to register. Keep records.
• If it is more than £1,000: register for Self Assessment by 5 October.
• If you have a loss: claim actual expenses; a loss may be set against your wages, subject to the rules.
• If self-employment and property income passed £30,000 in 2025/26: you join Making Tax Digital for Income Tax from 6 April 2027. Wages do not count. See MTD with multiple income sources.

What to do now

1. Check your contract for any second job rules.
2. Add up your gross side income for 2025/26 and 2026/27.
3. Register for Self Assessment if you are over £1,000.
4. Set money aside: 20% of profit is a sensible floor for a basic rate taxpayer.
5. Read our guide to side hustle tax if your income comes through apps.

Frequently asked questions

Can I be employed and self-employed at the same time?

Yes. GOV.UK confirms you can run a business and be employed at the same time. You pay PAYE on your wages and report profits through Self Assessment.

Do I pay National Insurance twice if I am employed and self-employed?

You pay Class 1 on wages and Class 4 on profits over £12,570. An annual maximum applies to people who pay both, and HMRC works it out.

Do I need to tell my employer I am self-employed?

There is no tax rule requiring it. Your employment contract may require you to ask permission for outside work, so check it.

How much can I earn self-employed before paying tax?

Up to £1,000 gross a year is covered by the trading allowance in 2026/27, rising to £3,000 from 6 April 2027. Above that, profits are taxed at your marginal rate.

Do I need Making Tax Digital if I have a job and a side business?

Only if your gross self-employment and property income passes the threshold. Wages are not counted, so a job plus £10,000 of sales does not bring you in from April 2027.