Side Hustle Tax UK: Reporting Side Hustle Income on Your Self-Assessment Return

You must report side hustle income to HMRC on a self-assessment return when your gross trading income exceeds the £1,000 trading allowance in a tax year, and for 2026/27 that year runs from 6 April 2026 to 5 April 2027. Side hustle tax UK rules apply whether you sell online, freelance, walk dogs or drive for a platform, and they apply even when your main job already deducts PAYE. Income that stays at or below £1,000 gross is ignored; income above it triggers registration, a return, and tax at your marginal rate on the profit. Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice, explains below when you must register, how the allowance and expenses interact, what the tax and National Insurance look like with worked figures, and how Making Tax Digital fits in.

Key Takeaways

• The trading allowance lets you receive up to £1,000 of gross side hustle income in a tax year without reporting it to HMRC.
• You must register for self-assessment by 5 October after the end of the tax year in which the side hustle began, so by 5 October 2027 for a side hustle that starts in 2026/27.
• Side hustle profit is added to your employment income and taxed at 20% up to £50,270, 40% up to £125,140 and 45% above that.
• Class 4 National Insurance is 6% on profits between £12,570 and £50,270, and Class 2 is not payable below the £7,105 small profits threshold, so many small side hustles pay no National Insurance at all.
• You choose either the £1,000 trading allowance or your actual expenses for each tax year, never both.
• Making Tax Digital for Income Tax applies from 6 April 2026 only if your gross self-employment and property income exceeds £50,000, with thresholds of £30,000 from April 2027 and £20,000 from April 2028.

Do you have to report side hustle income to HMRC?

You have to report side hustle income to HMRC when your gross trading income, measured before any expenses, exceeds £1,000 in the tax year. The test uses turnover, not profit, so £1,200 of sales with £900 of costs still needs reporting. The £1,000 limit applies across all your trades combined, not to each one.

The registration deadline is 5 October after the end of the tax year in which the work began. If your side hustle started in 2025/26, that date was 5 October 2026 and has now passed, so you should register immediately and file the 2025/26 return by 31 January 2027 to limit late-notification penalties. HMRC also receives data from online marketplaces and gig platforms under digital platform reporting rules that began on 1 January 2024, so income is now visible to HMRC whether or not you declare it.

If you are unsure whether your activity counts as trading, read about when a side hustle becomes a business in HMRC's eyes. Online sellers should also see the tax rules for selling on Etsy, eBay or Vinted.

How does the £1,000 trading allowance work?

The trading allowance gives you a £1,000 tax-free deduction against gross trading income, and you can use it instead of deducting your real costs. When gross income is £1,000 or less, the allowance covers it fully and you need do nothing. When income is higher, you pick the better of two methods for the year.

Take a worker with gross side income of £1,800 and genuine costs of £300. Deducting the £1,000 allowance leaves taxable profit of £800, which costs £160 at 20%. Deducting actual expenses leaves £1,500, which costs £300. The allowance saves £140.

Now take gross income of £6,000 and costs of £1,500. Actual expenses leave profit of £4,500, whereas the allowance leaves £5,000, so for a basic rate taxpayer actual expenses save £100 (20% of £500). The rule of thumb is simple: if your allowable costs are below £1,000 use the allowance, and if they are above £1,000 claim the expenses. You make the choice each year on the return, and you must keep records for either route.

How is side hustle profit taxed alongside a job?

Side hustle profit is added on top of your employment income and taxed at the highest rate that income reaches. Your personal allowance of £12,570 is usually used up by your salary, so the first pound of side hustle profit is normally taxed at 20%, or 40% once total income passes £50,270.

Using the figures above, an employee on £45,000 with £4,500 of profit has total income of £49,500, below the higher rate threshold, so income tax is £900. An employee on £60,000 pays 40% on the same profit, which is £1,800. Class 4 National Insurance applies only to profits above £12,570, so neither person pays any, and Class 2 is not due below the £7,105 small profits threshold, so many small side hustles pay no National Insurance at all.

A bill of £900 is under £1,000, so no payments on account arise. Once the self-assessment bill exceeds £1,000 and less than 80% of the tax is collected at source, HMRC asks for payments on account on 31 January and 31 July. In some cases HMRC may collect through your PAYE code instead.

Where do you report side hustle income on the return?

Side hustle income goes on the self-employment pages of the self-assessment return, where you enter your turnover and either your allowable expenses or the trading allowance. The return asks for total gross income, so keep a simple record of every payment received, each cost incurred and the date, because HMRC can ask for evidence for at least five years after the 31 January filing deadline.

Your employment income is reported separately from your P60 or final payslip, so both sources appear on the same return. The online return and the balancing payment are both due by 31 January after the tax year ends, which means 31 January 2028 for 2026/27 unless you are in Making Tax Digital. Check the self-assessment deadlines for 2026/27 to plan the cash needed, because the first year can include a balancing payment plus a payment on account.

Does Making Tax Digital apply to a side hustle?

Making Tax Digital for Income Tax applies to a side hustle only when your combined gross self-employment and property income exceeds the relevant threshold. The threshold is £50,000 from 6 April 2026, £30,000 from 6 April 2027 and £20,000 from 6 April 2028, tested on gross income before expenses and not on profit.

Employment income does not count towards the test. A typical side hustle earning a few thousand pounds therefore stays outside Making Tax Digital for now and continues to file an annual self-assessment return. If you do fall within the rules, you must keep digital records and send cumulative quarterly updates plus a final declaration by 31 January, as set out in this summary of what sole traders submit each quarter.

Frequently Asked Questions

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

You can receive up to £1,000 of gross side hustle income in a tax year without reporting it, because of the trading allowance. Above £1,000 you must register for self-assessment, and tax is charged on your profit once your total income exceeds the £12,570 personal allowance.

Do I need to tell HMRC about a side hustle if I already have a job?

You must tell HMRC about a side hustle if your gross trading income before expenses exceeds £1,000 in the tax year, even if you are employed and pay tax through PAYE. You then register for self-assessment and report the income on a tax return.

When do I have to register for self-assessment for a side hustle?

You must register by 5 October following the end of the tax year in which the side hustle began. A side hustle that started in 2026/27 therefore needs registering by 5 October 2027. The online return and the tax payment are both due by 31 January after the tax year ends.

Can I claim the trading allowance and my expenses together?

You cannot claim both. For each tax year you choose either the £1,000 trading allowance or your actual allowable expenses. The allowance usually wins when your genuine costs are below £1,000, while actual expenses are better when your costs exceed £1,000.

Do I pay National Insurance on side hustle profits?

Self-employed profits attract Class 4 National Insurance at 6% on the slice between £12,570 and £50,270 in 2026/27, and 2% above that. Class 2 contributions are not payable while your profits stay below the £7,105 small profits threshold, so many small side hustles pay no National Insurance at all.

How Blue Tick Can Help

Blue Tick Accountants helps employees with a second income register for self-assessment, choose between the trading allowance and actual expenses, and file accurate returns on time, including catching up where a side hustle was missed. Blue Tick also forecasts the 2026/27 bill and any payments on account, so there are no surprises in January. Head to our website and book a meeting now.

Conclusion

A side hustle becomes reportable the moment gross income passes £1,000 in a tax year, and the sensible response is to register early, keep clean records and pick whichever of the allowance or actual expenses gives the lower bill. For most employees the cost is 20% or 40% of profit with no National Insurance on small amounts. Missing the 5 October registration date is the costly mistake, so act as soon as your income approaches the limit.

About the Author

This guide was written by Leon, founder of Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice that helps landlords, limited company owners and the self-employed across the UK. It was last reviewed for the 2026/27 tax year.

This article is intended for general informational purposes only and does not constitute tax, legal, or financial advice. Tax rules are subject to change and their application will depend on your individual circumstances. You should always seek advice from a qualified professional before taking action. Blue Tick Accountants accepts no liability for decisions made on the basis of this content.

Related reading: Side Hustle Tax UK 2026/27: 5 Mistakes to Avoid and How to Fix Them.