UK side hustle tax basics: the £1,000 allowance, Self Assessment and platform reporting

Who this is for

You have a job, or you’re not working, and you’ve started earning a bit on the side: editing, making videos, selling things you make, or setting up automations for a local business. This guide covers the four things most people in that position need to know: the £1,000 trading allowance, when to register for Self Assessment, the reporting rules for online platforms that started in 2024, and what records to keep.

The tax year runs from 6 April to 5 April. All the dates below follow from that.

Are you trading, or just selling a few things?

HMRC treats you as trading if, for example, you sell regularly to make a profit, make things to sell, or get paid for a service (GOV.UK, Working for yourself, checked 24 Oct 2026). Clearing out your loft is usually different. GOV.UK says you’re unlikely to need to tell HMRC or pay tax when you sell your own unwanted possessions, although selling a single item, or a set, for more than £6,000 may mean Capital Gains Tax (GOV.UK, income from online platforms, checked 24 Oct 2026).

Paid freelance work, including AI-assisted writing, video or automation work for clients, is normally a service, so it counts as trading income.

The £1,000 trading allowance

You can get up to £1,000 a year of trading income tax-free. This covers self-employment, casual services such as babysitting or gardening, and hiring out personal equipment (GOV.UK, Tax-free allowances on property and trading income, checked 24 Oct 2026).

• £1,000 or less: if your gross trading income (before expenses) is £1,000 or less in a tax year, you usually don’t need to tell HMRC, though you must still keep records and there are exceptions (see below).
• More than £1,000: you must register for Self Assessment and send a return. You can then either deduct your actual expenses, or deduct the £1,000 allowance instead (HMRC calls this “partial relief”). You can’t do both.
• It counts gross income: the £1,000 is what you take in, not your profit. Paying £20 a month for an AI tool doesn’t lower that figure.

The allowance can’t be used for income from your employer or your spouse’s or civil partner’s employer, from a company you or someone connected to you owns or controls, or from a partnership. GOV.UK says you must register for Self Assessment, even if you’re under £1,000, if you want to claim relief for a loss, pay voluntary Class 2 National Insurance, or claim Tax-Free Childcare or Maternity Allowance based on your self-employment.

Coming later, not in force yet: the government has announced plans to raise the trading income threshold for reporting from £1,000 to £3,000 “within this Parliament” (GOV.UK news, checked 24 Oct 2026). Until GOV.UK confirms a start date, go by the £1,000 rule.

Registering for Self Assessment

If you go over £1,000 of gross trading income and haven’t sent a return before, you must register by 5 October after the end of the tax year in which you earned it (GOV.UK, Register for Self Assessment, checked 24 Oct 2026).

If you missed the 5 October 2026 deadline for 2025–26 income, register now. GOV.UK says you may get a penalty for registering late, and that if you register after 5 October you’ll have 3 months from the date of HMRC’s letter to file (GOV.UK, Self Assessment deadlines, checked 24 Oct 2026). If you’re also employed, you may be able to pay through your tax code if you file online by 30 December 2026. Not sure whether you need a return at all? Use HMRC’s checker.

Digital platform reporting (from 1 January 2024)

Since 1 January 2024, online platforms that let you sell goods or services have had to collect information about sellers and report it to HMRC (GOV.UK, Selling goods or services on a digital platform, checked 24 Oct 2026). Freelance marketplaces count, as well as selling sites. In practice:

• The platform will ask for your full name, home address, date of birth and National Insurance number.
• It reports what you earned in each calendar year by 31 January of the following year, and must give you a copy of what it sends to HMRC. That copy shows your earnings after the platform’s fees, split into calendar quarters.
• Sellers of goods are not reported if they make fewer than 30 sales and receive less than about £1,700 (€2,000) in the year. That exception doesn’t apply to services, so freelancers can be reported whatever they earn (GOV.UK, digital platform operators, checked 24 Oct 2026).
• Being reported doesn’t automatically mean you owe tax. But HMRC can now see the numbers, so make sure your own figures add up.

Watch out: platform reports cover a calendar year (January to December), but your tax return covers 6 April to 5 April. Your own records need to show which tax year each payment belongs to.

Keeping records

Keep records even if you think you’ll stay under £1,000, because they’re how you show HMRC that you did (GOV.UK, Business records if you’re self-employed, checked 24 Oct 2026). A simple set-up is enough to start:

• A spreadsheet with one row per payment: date, client or platform, amount, and what it was for.
• Copies of invoices you send, plus platform statements and payout reports.
• Receipts for expenses such as software subscriptions, equipment and phone costs. They only matter if you claim actual expenses instead of the £1,000 allowance.
• Bank statements. A separate account for side-hustle money makes all of this easier, though it isn’t required.

Since the 2024–25 tax year, the cash basis is the default for most self-employed people, so you record money when it comes in or goes out (GOV.UK, Cash basis, checked 24 Oct 2026). Keep your records for at least 5 years after the 31 January filing deadline for that tax year.

Two thresholds to know about as you grow

• Making Tax Digital for Income Tax: since 6 April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and send quarterly updates. The threshold falls to £30,000 from April 2027, and the government plans £20,000 from April 2028 (GOV.UK, Making Tax Digital for Income Tax, checked 24 Oct 2026).
• VAT: you must register if your taxable turnover goes over £90,000 in the last 12 months, or you expect it to in the next 30 days (GOV.UK, When to register for VAT, checked 24 Oct 2026).

Sources

All on GOV.UK, checked 24 October 2026. Rules change, so check the current version.

• Working for yourself: gov.uk/working-for-yourself
• Check if you need to tell HMRC about your income from online platforms: gov.uk/guidance/check-if-you-need-to-tell-hmrc-about-your-income-from-online-platforms
• Tax-free allowances on property and trading income: gov.uk/guidance/tax-free-allowances-on-property-and-trading-income
• Boost for side-hustlers (planned £3,000 threshold): gov.uk/government/news
• Register for Self Assessment: gov.uk/register-for-self-assessment
• Self Assessment deadlines: gov.uk/self-assessment-tax-returns/deadlines
• Check if you need to send a Self Assessment tax return: gov.uk/check-if-you-need-tax-return
• Selling goods or services on a digital platform: gov.uk/guidance/selling-goods-or-services-on-a-digital-platform
• Check if you need to register as a digital platform operator (reporting thresholds): gov.uk/guidance/check-if-you-need-to-register-as-a-digital-platform-operator
• Business records if you’re self-employed: gov.uk/self-employed-records
• Cash basis: gov.uk/simpler-income-tax-cash-basis
• Making Tax Digital for Income Tax: gov.uk/guidance/use-making-tax-digital-for-income-tax
• When to register for VAT: gov.uk/vat-registration/when-to-register