Short answer: In the UK you can earn up to £1,000 from a side hustle in a tax year tax-free under the trading allowance, and you do not need to tell HMRC. Earn more than £1,000 and you must register for Self Assessment by 5 October after the tax year ends, then report the income and pay any tax due. Tax is charged at your normal income tax rate, plus Class 4 National Insurance once profits pass £12,570.
Tax is the part of a side hustle nobody posts about, and it is where avoidable panic happens. I have filed as a self-employed person for years, so here is the plain-English version of what you actually owe, when, and how to stay out of trouble. This is general information for the UK, not personal tax advice, so check your own situation with HMRC.
Do you pay tax on a side hustle in the UK?
You pay tax on a UK side hustle only once your gross income from it passes £1,000 in a tax year. Below that, the trading allowance gives you full relief: no tax, and no need to report it. Above £1,000, the whole picture changes and you move into the Self Assessment system. Note this is about income, not profit, so it is your total takings before expenses that count toward the £1,000.
What is the £1,000 trading allowance?
The trading allowance is a £1,000 tax-free allowance for casual or self-employed income, confirmed by GOV.UK and explained for side hustlers on HMRC’s Tax Help for Hustles campaign. If your gross trading income for the year is £1,000 or less, you get full relief and do not need to file. If it is more, you can either deduct the £1,000 allowance from your income or deduct your actual expenses, whichever leaves you better off, but not both.
When do you need to register for Self Assessment?
If you earn more than £1,000, you must register for Self Assessment by 5 October following the end of the tax year, then file and pay by the following 31 January. The UK tax year runs 6 April to 5 April. Here are the dates for a side hustle you started earning from in the 2025/26 tax year.
| What | Deadline (2025/26 income) |
|---|---|
| Tax year ends | 5 April 2026 |
| Register for Self Assessment | 5 October 2026 |
| File online return & pay tax | 31 January 2027 |
How much tax and National Insurance will you pay?
Side hustle profit is added to your other income and taxed at your normal rate: 20% in the basic-rate band, 40% in the higher-rate band, after your £12,570 personal allowance (if not already used by a main job). On top of income tax, the self-employed pay Class 4 National Insurance at 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270, per GOV.UK. If you already have a full-time job using your personal allowance, assume roughly 20% to 40% of your side hustle profit should be set aside for tax.
The simplest habit that saves you: open a separate savings pot and move about 30% of every side hustle payment into it the moment it lands. The Finances Toolkit includes a tax reserve calculator that does this maths for you, which is exactly the kind of avoidable January stress it was built to remove.
What about the new £3,000 reporting threshold?
The government has announced that the income level at which you must file a full Self Assessment return for trading income will rise to £3,000, with a simpler online route for amounts between the allowance and that figure. Important nuance: this does not make the first £3,000 tax-free. The tax-free trading allowance is still £1,000, so tax can still be due above that even when a full return is not required. Treat £1,000 as the line where tax starts, and watch GOV.UK for the new service going live.
What records should you keep?
Keep a record of every payment in and every business expense out, with dates and receipts, for at least five years after the 31 January filing deadline. A simple spreadsheet is enough when you start. Track income, expenses, and the date of each, and you will have everything a Self Assessment return asks for.
Frequently asked questions
Do I need to tell HMRC about a side hustle under £1,000?
No. If your gross trading income is £1,000 or less in the tax year, the trading allowance gives full relief and you do not need to report it or register for Self Assessment.
Is the £1,000 based on income or profit?
Gross income, before expenses. If your total takings exceed £1,000 you must report, even if your profit after costs is small.
What happens if I miss the deadline?
HMRC charges an automatic £100 penalty for a late return, with further penalties and interest the longer it goes. Register early and file before 31 January to avoid them.
Do I pay National Insurance on a side hustle?
You pay Class 4 National Insurance once your self-employed profits pass £12,570 in the year, at 6% up to £50,270 and 2% above. Below that profit level, no Class 4 is due.
Related UK tax and admin guides
- Do you pay tax on Vinted in the UK?
- The HMRC 30-item rule explained
- Which selling apps report to HMRC in 2026?
- How to register as self-employed for a side hustle
- How much should you set aside for tax?
This is general information, not personal tax advice. Rules and figures can change, so confirm your position with HMRC or a qualified accountant. For the wider picture, read how to make money online in 2026, or get the tax reserve and spending tools in The Finances Toolkit.