Do you have to pay tax on your side hustle? Here's how to find out.

Author

George Beecroft
January 30, 2026

👋 Hey guys - Noah here,

Last week, my mate got a letter from HMRC.

He'd been reselling trainers on eBay for the past two years. Making about £400 profit per month, but he never told HMRC about it.

Now he owes them £3,200 in back taxes. Plus a £100 penalty. Plus interest.

He had no idea he was supposed to pay tax on it.

This is happening to thousands of people right now. HMRC is cracking down on side hustles.

If you're making money on the side, you need to know the rules. Because ignorance isn't an excuse.

Let me break it down for you...

The £1,000 rule you need to know

Here's the most important number: £1,000.

If you earn less than £1,000 profit from your side hustle in a tax year, you don't need to tell HMRC. You don't pay tax on it. You're fine.

But the second you earn over £1,000 profit, everything changes.

You need to register with HMRC as self-employed. You need to file a Self Assessment tax return. And you'll probably owe tax.

This isn't per side hustle. It's total across all your side hustles combined.

So if you make £600 from eBay, £300 from dog walking, and £200 from Fiverr, that's £1,100 total. You're over the limit.

What counts as a side hustle?

HMRC cares about whether you're "trading" or not.

These count as trading (taxable):

  • Reselling items for profit (buying trainers to flip, making crafts to sell)

  • Freelancing (graphic design, writing, consulting)

  • Content creation (YouTube, TikTok, Instagram if you're making money)

  • Delivery driving (Uber Eats, Deliveroo)

  • Dog walking or pet sitting as a business

  • Tutoring

  • Renting out property on Airbnb

These don't count (not taxable):

  • Selling your old clothes on Vinted

  • Clearing out your garage on eBay

  • Selling personal items you no longer want

If you're buying things specifically to sell them for profit, that's trading. If you're just getting rid of your old stuff, that's not.

How much tax will you actually pay?

This is where it gets a bit complicated, but stay with me.

You don't pay tax on your total earnings. You pay tax on your profit.

Profit = Income - Expenses

So if you made £5,000 from reselling but spent £3,000 on stock and postage, your profit is £2,000.

You can deduct the £1,000 trading allowance from that, leaving £1,000 taxable profit.

Then you pay income tax on that £1,000.

If you're in the basic rate tax band (most people are), that's 20% tax. So £200.

Plus you might owe National Insurance too, which is another 9%.

The exact amount depends on your other income. If you have a full-time job, your side hustle income gets added to your salary. This could push you into a higher tax bracket.

How to register with HMRC

If you earn over £1,000, here's what you need to do:

Step 1: Register as self-employed with HMRC.
You must do this by 5th October after the end of the tax year you started earning. So if you earned over £1,000 between April 2024 and April 2025, you need to register by 5th October 2025.

Step 2: File a Self Assessment tax return.
The deadline is 31st January following the tax year. So for the 2024-2025 tax year, you file by 31st January 2026.

Step 3: Pay your tax bill.
Also due by 31st January.

Miss these deadlines and you'll get fined. It starts at £100 and goes up the longer you leave it.

The big mistake people make

Most people think "HMRC won't find out."

Wrong.

From January 2024, platforms like eBay, Etsy, Vinted, Uber, Deliveroo and Airbnb are required to report your earnings to HMRC if you:

  • Earn over £1,700 per year, OR

  • Complete more than 30 transactions per year

HMRC is getting this data automatically. They're cross-checking it against tax returns.

If you're earning money and not declaring it, they will find out eventually.

What to do right now

If you're earning under £1,000: You're fine. Keep going.

If you're earning over £1,000 and haven't registered: Register with HMRC as soon as possible. Don't wait. The penalties for late registration are worse than just registering now.

If you've been earning over £1,000 for a while and never told HMRC: You need to come clean. Contact HMRC and tell them. They're usually more lenient if you come forward yourself rather than waiting for them to find you.

Keep records: Save all your receipts. Track every expense. You can deduct these from your profit and pay less tax.

Want to learn how to build a proper side hustle?

Paying tax is part of running a real business. And if you're serious about making money on the side, you need to do it properly.

My friend Samuel Leeds runs free property training that shows you how to build real wealth through property investment. It's a proper business model that can replace your income.

If you want to stop messing around with small side hustles and learn how to build actual wealth, this training is for you.

All the best,
Noah