Tax Planning
Tax Planning Tips for Self-Employed and Side Hustlers in the UK after Recent Threshold Changes
With HMRC raising the Self-Assessment reporting threshold for trading, property and ‘other’ income to £3,000 gross, what you earn and how you report it could change significantly.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
## What’s changed?
- The UK government recently confirmed that the threshold for **Income Tax Self Assessment (ITSA)** reporting for **trading, property and ‘other taxable’ income** will be aligned and raised to **£3,000 gross** for each category. ([gov.uk](https://www.gov.uk/government/publications/summary-of-tax-update-spring-2025-simplification-administration-and-reform/tax-update-spring-2025-simplification-administration-and-reform-summary?utm_source=openai))
- As a result, up to **300,000 taxpayers** who previously filed Self-Assessment returns may no longer need to do so. ([gov.uk](https://www.gov.uk/government/news/boost-for-side-hustlers-as-300000-people-to-be-taken-out-of-tax-returns-government-announces?utm_source=openai))
- The change will reduce administrative burdens without changing underlying tax liabilities. You’ll still need to report income and pay any tax due, but via a new, simpler digital service. ([gov.uk](https://www.gov.uk/government/publications/summary-of-tax-update-spring-2025-simplification-administration-and-reform/tax-update-spring-2025-simplification-administration-and-reform-summary?utm_source=openai))
## Why this matters for tax planning
- If you are a gig-worker, freelancer, landlord or side business owner combining property/business income: these changes may **save you time and possibly money** in compliance costs. 🕒
- But **tax still must be paid**: even where no Self-Assessment return is needed, you will need to declare income under the new service and settle liabilities.
- There could be cash flow implications: withholding Self-Assessment might reduce ability to claim certain reliefs or allowances if used to frame tax return positions.
## Examples
| Scenario | Before change | After change |
|---|---|---|
| Alice sells handmade crafts occasionally for £2,500/year | Must file Self-Assessment (trading income) | No return needed; income below £3,000 threshold; use new digital service to report only if desired or required |
| Bob lets out a room, earns £2,800 income | Filed Self-Assessment; paid expenses etc. | Similar: likely exempt from filing, but can opt in; ensure correct expense records just in case |
## Actionable steps to take now
1. **Review all income streams**: trading, property, “other taxable” – sum each category separately, check whether any category exceeds £3,000 gross. If yes, you still need to file.
2. **Keep good records** even if you expect to be below threshold. Should you exceed it, or wish to claim expenses later, clear supporting documentation will matter.
3. **Decide whether to opt in**: the government allows those who prefer to stay in full Self-Assessment to do so. It may help where reliefs or multiple income streams make optimizations useful. ([gov.uk](https://www.gov.uk/government/publications/summary-of-tax-update-spring-2025-simplification-administration-and-reform/tax-update-spring-2025-simplification-administration-and-reform-summary?utm_source=openai))
4. **Understand digital services**: become familiar with HMRC’s upcoming simpler online reporting channel; it may differ in timing or format from Self-Assessment.
5. **Watch for related reforms**: like changes to Inheritance Tax, non-dom rules, tax on pensions etc., to understand the broader planning landscape. (See other policies below.)
## Risks & trade-offs
- Not filing Self-Assessment when required can lead to penalties — though the threshold should prevent those.
- Filing lesser income via a simpler service may limit some reliefs or concessions only available via full Self-Assessment.
- If income fluctuates, crossing threshold one year but not next, you may find yourself filing occasionally — plan counts and cash flow accordingly.
## Take-away
These changes are great news if you have relatively small income arising from side hustles, occasional rentals or “other taxable” activities. While you save on the burden of preparing full Self-Assessment returns, it’s still essential to maintain proper records and check whether you’re over the new thresholds. Use the simpler service where available, and consult a tax adviser if you have complex income or want to continue with full Self-Assessment for strategic purposes. This could be the first step in more modern, streamlined tax planning for many UK sole traders and side-earners.