New to this? Have a read of How does tax work? first. It covers the basics from scratch in a few minutes.
The £1,000 trading allowance
If you make money on the side, whether that's freelancing, tutoring, reselling or a small online shop, the first £1,000 of income a year is tax-free. That's £1,000 of income before any costs, not profit. Below that, you don't usually need to tell HMRC, but keep a record of what you earn.
Is it a hobby or a business?
Clearing out your wardrobe and selling things you no longer need isn't usually trading. Buying things to sell on at a profit, making things to sell, or offering a service for money usually is. If you're not sure, HMRC's guidance and the Income Tax helpline can tell you where you stand.
Earning more than £1,000
Once your side income goes over £1,000 in a tax year, you need to:
- Register for Self Assessment by 5 October after the tax year ends. For the 2026/27 tax year, that's 5 October 2027.
- File a tax return online by 31 January following.
- Pay any tax you owe by that same 31 January.
You'll pay Income Tax on your profit at your usual rate, on top of your salary. You can either deduct your real costs or take the £1,000 allowance off your income instead, whichever is better for you. Keep receipts either way.
Making Tax Digital
If your income from self-employment and property adds up to more than £50,000, you now have to keep digital records and send HMRC quarterly updates. That threshold drops to £30,000 from April 2027, and £20,000 from April 2028. It's worked out on your income before costs, and most side hustles are well below it.
Online platforms report to HMRC
Selling sites and apps share some details about sellers with HMRC. That's another reason to keep good records. If you've earned over the allowance in the past without telling HMRC, it's usually better to come forward yourself.
Plan for the tax bill
Unlike your salary, nothing is taken off side hustle income as you go. Put aside a share of every payment in a separate account, so the bill in January isn't a shock. Our budgeting guide can help you build it in.
Common questions
Do I pay tax on selling clothes on Vinted or eBay?
Not usually, if you're selling your own things you no longer need. If you're buying items to resell, or making things to sell, that's trading, and the £1,000 allowance and tax rules apply.
Does the £1,000 allowance apply if I also have a job?
Yes, it's for income from a side hustle on top of a job, as long as the income doesn't come from your employer.
When is the Self Assessment deadline?
Register by 5 October after the tax year ends. Then file online and pay by 31 January.
Sources
We checked this guide against these sources on 13 October 2026. Rules and allowances can change, so check the latest position before you act.
- GOV.UK: Tax-free allowances on property and trading income
- GOV.UK: Register for Self Assessment
- GOV.UK: Making Tax Digital for Income Tax
This guide is general information, not personal financial advice. Read our full disclaimer.