Do I Pay Tax on a Side Hustle?
- Kyle Randall
- 4 days ago
- 3 min read
Understanding Tax on Side Hustles in the UK
A very common question people ask is: “Do I need to pay tax on a side hustle?”
Side hustles are increasingly popular — from freelance work and online selling to content creation and occasional contract work. The good news is that small amounts of income aren’t always taxable, but once you cross certain thresholds, HMRC expects you to report it.
In this guide, we explain when side hustle income is taxable, how much you can earn before paying tax, and what you need to do if you go over the limit.
What Counts as a Side Hustle?
A side hustle is any income you earn outside of your main job. Common examples include:
Freelance or contract work
Online selling (eBay, Etsy, Vinted)
Content creation or social media income
Tutoring or coaching
Gig economy work
If you’re earning money regularly, HMRC usually considers it taxable income.
How Much Can I Earn From a Side Hustle Before Paying Tax?
Most people can earn up to £1,000 per tax year from side income before needing to register or pay tax. This is known as the trading allowance.
If your side hustle income is:
£1,000 or less → usually no tax to pay
Over £1,000 → you’ll likely need to report it
This applies even if you’re already employed full-time.
Do I Need to Register if I Go Over £1,000?
Yes. Once your side hustle income exceeds £1,000 in a tax year, you’ll usually need to:
Register for Self Assessment
Report your income and expenses
Pay tax on your profits, not total income
You can learn more about how this works on our Self Assessment services page.
What Tax Do You Pay on a Side Hustle?
If your side hustle is taxable, you may pay:
Income Tax
National Insurance
The exact amount depends on:
Your total income
Whether you’re employed as well
Your allowable expenses
What Are Allowable Expenses?
You only pay tax on profits, which means you can deduct legitimate business expenses.
Examples may include:
Equipment or tools
Software or subscriptions
Marketing costs
Part of phone or internet bills
Claiming the correct expenses can significantly reduce your tax bill.
When Do You Pay Tax on Side Hustle Income?
Side hustle tax is usually paid after the tax year ends.
Income is reported through Self Assessment
Tax is paid directly to HMRC
Deadlines typically fall in January
Missing deadlines can result in penalties and interest.
Official HMRC Guidance
You can find official guidance on side income and tax on the HMRC website:https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income
How VIP Accounting Ltd Can Help
At VIP Accounting Ltd, we help individuals across Benfleet, Essex and the UK:
Understand whether side hustle income is taxable
Register for Self Assessment
Calculate tax correctly
Claim allowable expenses
Stay fully compliant with HMRC
If you’re unsure whether you need to pay tax on your side income, speak to our team via our contact page.
FAQs
Do I need to tell HMRC about a small side hustle?
If income is under £1,000, you usually don’t need to register — but you should keep records.
Do I pay tax even if it’s a hobby?
If it generates income, HMRC may still consider it taxable.
What if I make a loss?
You may still need to file a return, but losses can sometimes reduce future tax.
Can I stop my side hustle later?
Yes — but you should tell HMRC if you’ve registered.
Who Wrote This Article
Kyle Randall, Founder of VIP Accounting Ltd, provides clear, practical guidance to help individuals and business owners understand UK tax obligations and stay compliant with HMRC.
VIP Accounting Ltd is a strategic accounting and tax advisory firm based in Benfleet, Essex, supporting individuals and businesses across the UK with Self Assessment, tax planning, accounting, and HMRC compliance.
Comments