What is the trading allowance?

A £1,000 tax-free allowance for self-employment and casual trading income. Below it you needn’t register or report; above it you must declare the income.

When do I need to register for Self Assessment?

By 5 October after the tax year your gross trading income first exceeded £1,000. For 2026/27 income, that’s 5 October 2027.

Why is HMRC getting my platform data?

Digital platforms now report seller information to HMRC under international rules. It doesn’t create new tax — it just makes activity visible.

How is side hustle income taxed?

Profit (income minus the trading allowance or actual expenses) is added to your other income and taxed at your marginal rate, with possible Class 4 NICs.

Can I deduct expenses instead of the allowance?

Yes. Use whichever is higher — the £1,000 trading allowance or your actual allowable expenses — to minimise taxable profit.

What expenses can I claim?

Stock, materials, platform and payment fees, business use of phone, internet and home, and business mileage at HMRC rates.

Which forms do I file?

The SA100 main return plus the SA103 self-employment pages, by 31 January after the tax year.

A Unique Taxpayer Reference issued when you register for Self Assessment. You need it to file and pay.

Do I pay National Insurance on a side hustle?

You may pay Class 4 NICs (8% on profits over £12,570) through Self Assessment once profits are high enough.

What is the deadline to pay tax?

31 January after the tax year — so 31 January 2028 for 2026/27 — alongside any first payment on account.

Do I need to register if I earn under £1,000?

No. Income within the £1,000 trading allowance needn’t be registered or reported.

What is Making Tax Digital for side hustles?

From April 2026, those with self-employment/property income over £50,000 must keep digital records and file quarterly. The threshold drops to £30,000 in April 2027.

Can I claim mileage for my side hustle?

Yes — 45p per mile for the first 10,000 business miles, then 25p, if you use the simplified mileage method.

Do I need a separate business bank account?

Not legally required for sole traders, but it makes record-keeping and MTD compliance much easier.

What if I have a job and a side hustle?

Your employment is taxed via PAYE; your side-hustle profit is added on top through Self Assessment and taxed at your marginal rate.

Is hobby income taxable?

If you’re trading with a view to profit, yes. Genuine one-off or hobby sales of personal items usually aren’t.

Can I use the trading and property allowances together?

Yes — they’re separate £1,000 allowances, one for trading income and one for property income.

When should I consider a limited company?

As profits grow, a company can be more tax-efficient, but it adds admin. See our business tax hub and take advice.

How do I pay the tax I owe?

Through your HMRC online account by bank transfer, debit card or Direct Debit, by the 31 January deadline.

What records should I keep?

Records of all income and expenses, kept for at least five years after the 31 January filing deadline.

What is a payment on account?

Advance payments toward next year’s bill if you owe over £1,000, due 31 January and 31 July, each 50% of the prior year.

Can I backdate expenses before I started?

Pre-trading expenses incurred up to seven years before you start, that would have been allowable, can usually be claimed in your first year.

Do I charge VAT on a side hustle?

Only if your taxable turnover exceeds the VAT registration threshold. Most small side hustles are well below it.

Where can I find official guidance?

See gov.uk trading and property allowances and gov.uk/register-for-self-assessment.

Side Hustle Tax 2026/27 – Trading Allowance, Calculator & Self Assessment

Q: Do I pay tax on selling old clothes on Vinted?

Selling your own second-hand items at a loss isn’t taxable trading. Buying or making goods to sell for profit usually is.

Side Hustle
tax tracker.

The £1,000 trading allowance lets you earn tax-free from a side hustle. Above it you must register for Self Assessment. Platform reporting, allowable expenses, deadlines and Making Tax Digital — explained with worked examples.

✓ Verified 2026/27✓ HMRC sources✓ Free calculators

The £1,000 trading allowance

You can earn up to £1,000 gross a year from self-employment or casual trading completely tax-free under the trading allowance — no need to register or report. Earn more and you must register for Self Assessment and declare the income (you can still deduct the £1,000 allowance instead of actual expenses if that’s better).

Worked example

Side hustle income of £4,000, expenses £600

Gross income£4,000

Option A: deduct £1,000 allowancetaxable £3,000

Option B: deduct £600 actual expensestaxable £3,400

Best option hereA — use the £1,000 allowance

Pick whichever gives the lower taxable profit. Profit is taxed at your marginal Income Tax rate and may attract Class 4 NICs. Estimate it with the sole-trader calculator.

When you must register

Register for Self Assessment by 5 October following the tax year in which your gross trading income first exceeded £1,000. For income earned in 2026/27, register by 5 October 2027 and file by 31 January 2028.

⏱️ Key dates

5 October 2027 — register for Self Assessment.
31 January 2028 — file your return (SA100 + SA103 self-employment pages) and pay any tax.
HMRC issues a UTR after you register — keep it safe.

Platform reporting (Vinted, eBay, Etsy, Airbnb…)

Digital platforms now report seller data to HMRC under international rules. This doesn’t create a new tax — it simply means HMRC sees your activity. Selling personal second-hand items at a loss isn’t taxable trading; buying or making goods to sell, or providing services, usually is. If you’re trading above £1,000, declare it.

Allowable expenses

If you don’t use the trading allowance, deduct genuine business costs to reduce taxable profit:

Stock, materials and supplies.
Platform and payment fees.
Business use of phone, internet and home (see our working-from-home guide).
Business mileage — use the Mileage calculator (45p/mile for the first 10,000 miles).

🧾 Making Tax Digital from April 2026

If your combined self-employment and property income exceeds £50,000, from April 2026 you must keep digital records and send quarterly updates via MTD software. The threshold falls to £30,000 from April 2027. See our MTD hub.

🔗 Official sources

Trading allowance: gov.uk trading & property allowances. Register for Self Assessment: gov.uk/register-for-self-assessment.

2026/27 TAX YEAR IS HERE MTD FOR INCOME TAX NOW MANDATORY FOR LANDLORDS & SELF-EMPLOYED OVER £50K DIVIDEND TAX RATES INCREASED TO 10.75% & 35.75% — OPTIMISE YOUR PAYOUTS ADVANCED CALCULATORS FOR PROPERTY, CRYPTO, AND INHERITANCE TAX HERE

Making Tax Digital Help

Side Hustle
tax tracker.

Side Hustle

The numbers that matter.

Side Hustle Tax for 2026/27

The £1,000 trading allowance

Side hustle income of £4,000, expenses £600

When you must register

⏱️ Key dates

Platform reporting (Vinted, eBay, Etsy, Airbnb…)

Allowable expenses

🧾 Making Tax Digital from April 2026

🔗 Official sources

Calculate it in seconds.

Need tailored advice?

The numbers that matter.

Side Hustle Tax for 2026/27

The £1,000 trading allowance

Side hustle income of £4,000, expenses £600

When you must register

⏱️ Key dates

Platform reporting (Vinted, eBay, Etsy, Airbnb…)

Allowable expenses

🧾 Making Tax Digital from April 2026

🔗 Official sources

Calculate it in seconds.

Explore related personal tax topics.

Income Tax & PAYE

MTD for Income Tax

Working from Home

Business Tax Hub

Need tailored advice?

Side Hustle FAQs

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