The Trading Allowance Explained
If you earn less than £1,000 in total from trading/side activities within a tax year, you usually don’t need to report it, thanks to the Trading Allowance. Once income passes that limit—or involves providing services rather than just selling things—you’ll need to register for Self Assessment and declare it. (gov.uk)
Examples of What Counts and Doesn’t
Counts:
- Selling handmade goods regularly (e.g. weekly craft markets)
- Paid photography, content creation or tutoring over time
- Renting out property temporarily (if renting part is considered a business activity)
Doesn’t count:
- One-off sale of personal items, like a car or clothes, where you sell below what you paid for
When You Must Register & File
- If side hustle income exceeds £1,000 in the 2025-26 tax year, you must register for Self Assessment by 5 October 2026. (gov.uk)
- File by 31 January 2027 if doing it online and pay any tax due. Paper returns must meet earlier deadlines. (gov.uk)
Practical Tips to Stay On Top
- Track your side hustle income separately using spreadsheets or accounting apps
- Keep receipts of expenses (materials, travel, etc.), as many are deductible
- Use HMRC tools: “Where is your additional income from?” to check obligations (gov.uk)
- If earnings fluctuate year to year, consider estimating carefully so that payments on account reflect your situation
How this Interacts with Other Taxes
- Side hustle income is added to any PAYE or other income, potentially affecting your tax rate/bracket
- It may affect National Insurance contributions if you're self-employed
- If your side business grows, you might need to consider incorporation or register as a business for VAT
Case Example
Alex sells wedding stationery and makes £600; he also earns £500 from a small social media influencer activity during 2025-26. Combined, that’s £1,100, which exceeds the £1,000 allowance—so Alex must register for Self Assessment by 5 October 2026, file online by 31 January 2027, and declare all income and expenses. If only one source existed and it stayed under £1,000, no declaration needed.
Bottom Line
Side hustlers shouldn’t wait until Jan 2027 to wake up to tax obligations. If you think you’ll earn more than £1,000 in combined trading income in 2025-26, act now to register, track income, and keep good records. Staying compliant can save surprises later.