Are you earning extra money by selling handmade items, flipping products online, or offering services outside your regular job? If your side hustle income is more than £1,000 a year, HMRC has issued a warning—you might need to pay tax. This applies even if you’re also working a regular job and paid through PAYE. Here’s what you need to know about side hustle taxes in the UK and how to avoid penalties.
What Counts as a Side Hustle?
HMRC considers the following activities as “trading” or earning through a side hustle if you are making money regularly:
- Selling handmade products like art, crafts, beauty items, food, or digital downloads
- Buying items and reselling them at a profit, such as on auction sites or online marketplaces
- Upcycling or refurbishing furniture and selling it
- Offering paid services or content online
If you do these things casually or as a hobby, and earn less than £1,000 in total per year, you usually don’t need to worry. But once your total annual income from all side hustles crosses £1,000, tax rules apply.
HMRC Side Hustle Tax Rules Explained
Here’s a quick look at when you need to pay tax on your side income:
- If you earn £1,000 or less per year from your side hustle → No tax is due
- If you earn more than £1,000 per year from all your side hustles combined → You must tell HMRC, and may need to pay tax
- It doesn’t matter whether your side hustle is full-time or part-time, or even if you already pay tax through your regular job. This side income is not added to your payslip, so it’s your responsibility to report it.
What Happens If You Don’t Report?
If you earn more than £1,000 and don’t report your earnings, you may:
- Receive a penalty from HMRC
- Have to pay interest on late tax payments
- Be liable for more serious legal action if the amount is large or unpaid for too long
- Even if you forget, HMRC can track online transactions and payments, especially if you’re using popular platforms like eBay, Etsy, or other marketplaces.
Capital Gains Tax – For High-Value Sales
Apart from side hustle income, if you sell a personal item or collection worth over £6,000, such as art, jewellery, or a rare collectible, you may need to pay Capital Gains Tax (CGT). You must inform HMRC if this applies to you.
What Should You Do?
If your side hustle income is over £1,000:
- Visit the gov.uk website to check your tax responsibilities
- Register for Self-Assessment by October 5 of the following tax year
- Keep track of all your earnings, including sales, receipts, and profits
- Submit your Self-Assessment tax return on time
Earning extra money through side hustles is becoming common, but tax rules still apply. If your total income from online selling or services is more than £1,000 a year, make sure to inform HMRC to avoid penalties. It doesn’t matter if you’re already working in a full-time job. Side hustle income is separate and needs to be declared. Stay safe, stay honest, and stay informed.
FAQ’s
Do I need to pay tax if I earn over £1,000 from a side hustle?
Yes. If your total side income is more than £1,000 in a tax year, you must tell HMRC and may need to pay tax.
What activities count as side hustles or trading?
Making or selling products, reselling items online, upcycling furniture, or providing services through platforms are all considered side hustles.
Do I need to report my side hustle if I already have a job?
Yes. Your employer does not report this income. You must declare it separately through Self-Assessment.
What if I only sell items occasionally online?
If you’re just selling old personal items and earn less than £1,000 per year, you usually don’t need to pay tax.
When should I register for Self-Assessment?
You need to register with HMRC for Self-Assessment by October 5 following the end of the tax year in which you earned the income.
Im a oarr- time musician amounting to around £400-600 / yr , that is in a good year.
I have against this continous learning and events as part of that.
Do i get a tax rebate on loss of profit?
No Charles,
Govt will not give on loss of profit