Side hustle tax rules 2026: when you need to tell HMRC

You need to tell HMRC about a side hustle once your total income from it passes £1,000 in a tax year, counted before expenses. That £1,000 is the trading allowance, and it covers all your side hustles together. From 6 April 2027 both the allowance and the reporting threshold rise to £3,000.

What counts as a side hustle?

A side hustle is any trading activity you do on top of your main job or pension. HMRC’s Tax help for hustles campaign groups them into three types:

• Selling things, such as making crafts or buying items to resell
• Providing a service, such as delivery driving, tutoring or dog walking
• Creating content, such as sponsored posts and brand partnerships

Clearing out your wardrobe is not a side hustle. Selling your own unwanted possessions is usually not trading, so no Income Tax is due. Letting a room or property is not trading either; it is property income with its own £1,000 property allowance.

When do you need to tell HMRC?

You need to tell HMRC when your gross trading income for the tax year is over £1,000. The tax year runs from 6 April to 5 April.

Three points catch people out:

1. It is gross income, not profit. Sales of £1,200 with costs of £900 still cross the line.
2. All hustles count together. HMRC’s own example: £800 from content creation and £500 from selling crafts online adds up to £1,300, which must be reported.
3. PAYE does not cover it. Your employer’s payroll only taxes your salary. Side income has to be reported separately.

The £3,000 change was confirmed in HMRC’s tax information and impact note on 28 October 2026. The campaign site says a new online reporting tool is due by 2029 for people earning between £1,000 and £3,000. The details have not been published yet. See trading allowance triples to £3,000.

How do you know if it is trading?

HMRC decides using the “badges of trade” in its Business Income Manual at BIM20205. There are nine:

• a profit-seeking motive
• the number of transactions
• the nature of the asset
• similar trading transactions or interests
• changes made to the asset
• the way the sale was carried out
• the source of finance
• the time between buying and selling
• how the item was acquired

No single badge decides it. Buying stock to sell at a profit, selling often, and improving items before sale all point towards trading.

How to register for Self Assessment

Register for Self Assessment as self-employed by 5 October after the end of the tax year in which you crossed £1,000. For 2025-26, the deadline was 5 October 2026, and GOV.UK says registering late could lead to a penalty.

1. Check you need to: add up all side income for the tax year.
2. Register online at GOV.UK’s Self Assessment registration page.
3. Wait for your Unique Taxpayer Reference (UTR) by post.
4. Keep records of every sale and cost, even if you use an accountant.
5. File online and pay by 31 January after the tax year ends.

Our guide on how to register as a sole trader has the full process.

Allowance or expenses: a worked example

Above £1,000 you choose either your actual expenses or the £1,000 allowance, not both. GOV.UK’s allowances guidance says you cannot deduct other expenses for the same income once you take the allowance.

Sam earns £35,000 in a PAYE job. In 2026-27 Sam’s dog walking brings in £4,000, with £600 of costs.

The allowance saves Sam £80. In 2027-28, with a £3,000 allowance, the same takings would leave £1,000 taxable and £200 of tax. If your real costs are higher than the allowance, claim them instead. Our guide to sole trader expenses lists what you can claim.

What about National Insurance?

Class 4 National Insurance applies only once self-employed profits pass £12,570. GOV.UK’s self-employed National Insurance rates for 2026-27 are:

• Class 4 at 6% on profits between £12,570 and £50,270, and 2% above
• no Class 2 to pay if profits are £7,105 or more; you get the credit automatically
• voluntary Class 2 at £3.65 a week if profits are below £7,105

Most people with a side hustle and a full-time job pay no Class 4. Use the self-employed take-home calculator to check.

Which applies to you?

• If you only sold your own old things online, you usually have nothing to report, even if the platform reported you. See what platforms tell HMRC.
• If your side hustles took more than £1,000 in total in 2025-26, you should have registered by 5 October 2026. Register now and file by 31 January 2027.
• If you are under £1,000, you do not need to report or register.
• If you rent out a room or a parking space, check the property rules, not the trading allowance.

Frequently asked questions

How much can I earn from a side hustle before paying tax?

Up to £1,000 of gross income a tax year is covered by the trading allowance in 2026-27. From 6 April 2027 that rises to £3,000.

Is there a new side hustle tax?

No. The rules that tax trading income have not changed. Online platforms now report sellers to HMRC, but that does not create any new tax.

Does the £1,000 allowance apply to each side hustle separately?

No. It is one allowance for all your trading income combined, so add every side hustle together before comparing with £1,000.

What if I missed the 5 October registration deadline?

Register now. GOV.UK warns that registering late could lead to a penalty, and telling HMRC yourself before it contacts you puts you in a better position.

Do I need an accountant for a side hustle?

No. Many people file their own return online. An accountant can help if you have several income sources or are unsure whether you are trading.