Side-hustle tax in the UK (2026): what you owe and when to tell HMRC

If you earn money doing tasks, this is the part people get wrong. It is simpler than it looks.

The £1,000 trading allowance

You can earn up to £1,000 gross from self-employment in a tax year (6 April to 5 April) without telling HMRC anything. Gross means before you deduct any costs.

Over £1,000 and you must register for Self Assessment and file a return. You still may not owe tax, your personal allowance still applies, but you must file.

Platforms now report your earnings to HMRC

Since January 2024, UK digital platforms are legally required to collect seller information and report annual earnings to HMRC, with a copy to you each January. This is why any legitimate platform asks for your name, address, date of birth and National Insurance number before your first payout.

Two consequences:

1. HMRC already knows. Not declaring is no longer a grey area.
2. The reported figure is gross. It is the total the customer paid, before the platform's fee. Your taxable profit is lower, but only if you claim your costs, which means keeping records.

Note that unlike goods, services have no 30-sales or €2,000 exemption, all service earnings are reportable.

Registering

Register at gov.uk by 5 October following the end of the tax year in which you passed £1,000. Miss it and there are penalties. You get a UTR number, then file by 31 January online.

What you can deduct

Only costs "wholly and exclusively" for the business:

• Platform fees and payment processing.
• Tools and equipment (small items outright; larger items via capital allowances).
• Materials and consumables.
• Mileage at 45p per mile for the first 10,000 miles, then 25p. Keep a log, this is usually the biggest single deduction.
• Public liability insurance, DBS checks, trade memberships.
• A proportion of your phone bill.
• Working-from-home flat rate if you do admin at home.

You cannot deduct ordinary commuting, clothing that is not protective, or fines.

Two ways to work it out

Trading allowance method: deduct a flat £1,000 from your gross income instead of your actual costs. Simpler, and better if your real costs are under £1,000.

Actual costs method: deduct what you really spent. Better once you have a vehicle, tools and materials.

You choose per tax year, whichever gives the lower profit. You cannot use both.

National Insurance

Class 4 NI is due on profits above the lower profits limit, calculated automatically in your return. Class 2 changed in recent years, check the current position when you file, and note that if your profits are low you may want to pay voluntarily to protect your state-pension record.

VAT

Only if your turnover passes £90,000 in any rolling 12 months. Most taskers never approach this. If you do, register within 30 days of the month end.

A record-keeping routine that takes five minutes a week

1. One bank account (or at least one card) used only for the business.
2. Photograph every receipt into one phone album.
3. Download your platform earnings statement monthly.
4. Log mileage as you go, not in January.

Keep records for five years after the filing deadline.

This is general information, not tax advice. Check gov.uk or speak to an accountant about your own circumstances.