Tax on Side Hustles: What You Need to Know

Many of us have taken up a side hustle to earn extra cash—selling handmade items, freelancing, or doing deliveries. But it’s important to understand that even this additional income may be subject to tax.

In the UK, you can earn up to £1,000 annually from trading without needing to declare it—this is called the "trading allowance." If your side hustle earnings exceed £1,000, you will need to register with HMRC and complete a Self Assessment tax return. It’s crucial to keep records of your income and expenses, as legitimate business expenses can be used to reduce your taxable profit.

Common expenses include raw materials, marketing costs, software expenses, or even a portion of your home office costs if you work from home. Reporting accurate figures helps ensure you don't pay more tax than necessary. Missing deadlines can lead to penalties, so make sure to file on time—if you file online your Self Assessment tax return is due by January 31st following the end of the tax year.

Side hustles are a great way to make extra money, but staying on top of your tax responsibilities will keep things smooth and stress-free. If you need advice please get in touch!