Overview of the upcoming change
The UK government is aligning the reporting thresholds for trading, property, and ‘other taxable’ income at £3,000 gross each. If your income from any of these sources is under that threshold, you won’t need to submit a full Self Assessment tax return just for them, provided you meet no other return requirements. (gov.uk)
The change is expected to affect around 300,000 taxpayers, many with side hustles – those earning small sums from renting out a room, selling crafts online, pet care, or ride-sharing. The threshold shift frees them from filing Self Assessment returns solely for those small income streams. (gov.uk)
What does “other taxable income” include?
- Any taxable income not from employed earnings, pension or benefits—for example:
- Income from online marketplaces, sales, hobbies turned into small business activity;
- Renting out a spare room or property;
- Occasional payments (e.g. tutoring, gig economy) that don’t amount to self-employment in the traditional sense.
- Every stream must be considered separately – the threshold applies per category. (gov.uk)
New digital reporting option
If you’re under the threshold, you won’t have to file Self Assessment just for those incomes, but you can use a new simple digital reporting service to report them. This helps keep tax affairs transparent without all the burden of full self assessment. (gov.uk)
Example scenarios
- Case A: Mia sells handmade jewellery online, earning £2,500/year; she also sometimes rents out a spare room earning £1,500. Under the old system, each might force her to file. Under the new rules, neither category crosses £3,000, so no Self Assessment return just for those incomes is needed.
- Case B: John rents a flat (property income £4,000) and has a small photography side business (£2,000). Since the property income exceeds £3,000, he still must report that category via Self Assessment.
Implications for self-employed individuals and casual earners
Positive changes
- Less administrative hassle for people with modest side incomes.
- Potential savings on accounting/software costs if filing becomes unnecessary.
- Fewer penalties associated with missed returns for small incomes, assuming threshold remains respected.
Areas to watch out for
- Don’t ignore other requirements (like National Insurance, benefits, or when other income sources push you into returns).
- If you still expect Self Assessment (due to other incomes, share dividends, etc.), you’ll still need to file even if you’re under the threshold in trading, property, or other taxable incomes.
Action steps
- Review all income sources for 2024-25 to see if any category exceeds £3,000.
- If all categories are under the threshold and you currently file Self Assessment only for them, you may no longer need to. But confirm this via HMRC tools or advice.
- Keep good records anyway—even for income under threshold—so you can respond if HMRC requests details.
- Explore the new digital reporting service so you can use it voluntarily for transparency and simplicity.
Takeaway: If your side hustle or casual income is modest, you’re likely to benefit significantly from the new £3,000 thresholds. It’s not about “tax-free” entirely, but about greatly reduced compliance burden.