Thinking of setting up a side hustle? Got an expanding empire in online sales? There are lots of ways you might make money outside your main job, but did you realise there are tax rules for these that everyone has to follow? Here’s what you need to know.
As a general rule of thumb, if your extra income was more than £1000 in the last tax year (6th April 2024 – 5th April 2025) then you need to tell HMRC. If you have multiple income streams, then this £1000 applies to them all collectively and not individually (so, for example, if you made £900 from selling crafts online and then switched to dog walking and earned £800 then that is £1700 in total and over the £1000 limit). If your total income (including your main job) is below the basic personal allowance of £12,750 then you still may not have to pay any tax but you should still let HMRC know about those extra earnings above £1000.
It depends! If you’re just selling unwanted personal belongings from time to time, whether online or in person, you don’t usually need to tell HMRC. However, if the item or collection sold for £6000 or over then you might need to pay Capital Gains Tax. HMRC will class your side hustle as ‘trading’ (receiving income from goods or services) if you profit from reselling goods bought at car boot sales, charity shops or online, upcycle second-hand furniture to sell, make and sell handcrafted items or digital designs. These are just a few examples.
Anything that you receive income for could be classed as ‘trading’. No goods need to change hands – there are plenty of services that can still generate an income. For example, baby sitting, cleaning, dog walking, hiring out equipment, renting out parking spaces, or tutoring.
If you create content online then you also need to be aware of the value of any gifted products – for example, if you were paid £700 last year to post product review videos online then you might think that this is below the £1000 threshold. However, if they sent you the items to review and you got to keep these for free, then you would need to add their value to your income. If the gifted products were worth over £300, then you would now need to inform HMRC that you earned above the £1000 threshold. You would also need to keep records of any income from adverts that appeared on your videos as this may increase your content creation income.
If you get a payslip for your extra work (if you’ve done some extra hours at your main job or you’ve picked up some evening bar work, for example), then your tax should already be sorted out for you and you don’t need to tell HMRC about it. But do keep in mind that you will need to tell HMRC if you think you have overpaid or underpaid tax on any payslips.
However, income from side hustles isn’t usually included on your payslip from your main employer so it’s your responsibility to tell HMRC about money you make on the side. If you don’t tell HMRC about those extra earnings you might be given a penalty. Also, if HMRC find that you needed to pay tax on your income, but you didn’t inform them, you may be given a penalty plus HMRC charges interest on any late payment of tax – so the longer you put off paying, the more you may owe.
Still not sure about whether this all applies to you? You can check with HMRC to see if you do need to tell them about any additional income.
If you do need to register as a sole trader then you can find about Self Assessment registration here. Important deadline to remember: if you’ve not registered for Self Assessment before, you must register by 5th October 2025. When completing your Self Assessment tax return, you should have already paid tax through PAYE on income from your main job (and any others that you have received payslips for) and this will be shown on those payslips.
In summary, it’s important to be aware of any income from a second job or side hustle and to inform HMRC if this exceeds £1000 in the tax year. It’s your responsibility to keep full and accurate records of all sales, income and business expenses. Read more about keeping your pay and tax records here. If you need advice when completing your tax return, or managing the finances of the side hustle is becoming a source of stress, do feel free to get in touch with us at Palm Accountancy to see what benefits we can bring to your business.
