Made more than £1,000 from a side hustle? What to tell HMRC

If the gross income from your side hustle is more than £1,000 in the tax year, you generally need to tell HMRC about it. The £1,000 trading allowance is measured before deducting your costs, so it is not a £1,000 profit threshold.

This can apply whether you call the activity a business, hobby, side hustle, freelancing, content creation or simply “a bit of extra work”. Tax rules are less impressed by branding than humans are.

What counts towards the £1,000?

The trading allowance can apply to income from activities such as:

• freelance or consulting work;
• casual services;
• gardening, repairs or tutoring;
• delivery or driving work;
• social media content and influencing;
• online videos, podcasts or sponsorships;
• selling goods where you are actually trading;
• hiring out personal equipment.

If you have more than one source of trading or miscellaneous income, do not automatically assume each activity gets its own £1,000 allowance. HMRC's guidance requires the relevant trading receipts to be considered together.

Gross income is not profit

Suppose you receive £1,600 from freelance work and spend £800 on allowable business costs.

Your profit before considering the trading allowance may be £800, but your gross trading income is £1,600. That means you have crossed the £1,000 gross-income threshold for telling HMRC.

The tax calculation is a separate question from the requirement to report the income.

What if the income is £1,000 or less?

If your total qualifying gross trading income is £1,000 or less, the trading allowance may give full relief and you may not need to tell HMRC about that income.

There are exceptions. You may still need Self Assessment for another reason, or you may choose to file because you need to prove self-employment, claim a loss or deal with National Insurance or other reliefs.

Keep records even when the income is below the threshold. A platform payout total, bank statement or spreadsheet is considerably more convincing than “I think it was about £700”.

If the income is over £1,000

You will normally need to register for Self Assessment if you are not already registered.

When calculating taxable profit, eligible taxpayers can broadly choose between:

1. deducting actual allowable business expenses; or
2. using the trading allowance, up to £1,000, instead of those expenses.

You do not normally get both the £1,000 allowance and the same actual expenses.

If you spent very little, the allowance can be attractive. If you had significant genuine business expenses, using the actual expenses may be better.

Social media and content creation

HMRC specifically includes creating online content in its guidance on income from online platforms.

Relevant receipts can include:

• advertising revenue;
• sponsorship payments;
• affiliate commission;
• subscriptions;
• platform creator payments;
• cash payments for reviews or promotion;
• gifts or services received in return for promoting products.

The last point catches people out. Being paid partly in products does not necessarily make the economic benefit disappear for tax purposes.

Selling on eBay, Etsy, Amazon or similar platforms

Selling your old possessions is not automatically a trade.

If you occasionally sell unwanted personal items, you may not be trading at all. But if you regularly buy or make items with the intention of reselling them for profit, HMRC says you are more likely to be trading.

The important question is what you are actually doing, not merely which platform you use.

Does the platform reporting to HMRC mean I owe tax?

No.

Digital-platform operators may have separate obligations to collect seller details and report information to HMRC. HMRC explicitly says platform reporting does not automatically mean you owe tax.

You still apply the normal UK rules to decide whether the activity is taxable and whether you need to report it.

Also remember that platform reports may use calendar-year totals, while UK Income Tax works on the tax year from 6 April to 5 April. Do not copy one total blindly into a tax return.

What records should you keep?

Keep enough information to reconstruct the activity:

• platform statements;
• invoices;
• bank and payment-provider records;
• sales records;
• receipts for business costs;
• details of refunds or platform fees;
• records of non-cash payments or promotional products where relevant.

If your side hustle grows, basic record-keeping becomes much cheaper than archaeological reconstruction every January.

What if you went over £1,000 in an earlier year and did nothing?

Do not ignore it because the deadline has passed.

Work out:

1. which tax year the income belongs to;
2. gross income for that year;
3. actual expenses if you want to consider claiming them;
4. whether you were already in Self Assessment;
5. whether any return is now late.

If tax should have been reported but was not, correcting the position sooner is generally better than waiting for HMRC to ask first.

A quick test before asking for help

Have these figures ready:

• total money received in the tax year;
• the type of work or selling activity;
• total business costs;
• whether you already have a UTR;
• whether you have another job or other taxable income;
• the date the activity started.

Those six facts usually make it possible to distinguish a small tax-free activity from a genuine Self Assessment job quickly.