People earning extra income from side hustles, freelance work, online selling, rental income, or savings interest may need to notify HM Revenue and Customs (HMRC) to avoid unexpected tax bills, penalties, or changes to their tax code.
Millions of people across the UK earn money outside their main job through online selling, freelance work, rental income, savings interest, or side hustles. However, many may not realise that some forms of additional income may need to be declared to HMRC.
HMRC rules vary depending on how much money someone earns and where the income comes from. In some cases, tax may already be deducted automatically, while in others people may need to register for Self Assessment and report earnings directly to HMRC.
The tax authority has also increased its focus on online selling and digital platform reporting in recent years, leading to confusion among people who occasionally make extra money through websites and apps.
When to tell HMRC about extra income
Here are some of the changes and income sources people may need to tell HMRC about.
Selling items online
People who regularly sell goods online for profit may need to tell HMRC about their income. This can include selling through websites or apps such as eBay, Vinted, Etsy, or Facebook Marketplace. HMRC says people do not usually pay tax when simply selling unwanted personal belongings unless the items are sold for more than they originally cost. However, buying items to resell for profit or making goods to sell could count as trading income.
Starting freelance or self-employed work
Anyone starting self-employed work may need to register with HMRC for Self Assessment. This can include people doing occasional freelance work, consulting, delivery driving, dog walking, tutoring, or content creation alongside their main job.
Earning more than £1,000 from side income
People may need to report earnings if they make more than £1,000 in a tax year from self-employment or casual trading activity. The £1,000 trading allowance applies to total income before expenses are deducted.
Receiving rental income
People earning money from renting out property may need to declare the income to HMRC. This can include buy-to-let properties, holiday lets, or renting out a room in their home above the Rent a Room Scheme threshold.
Earning significant savings interest
Some savers may need to pay tax on interest earned from savings accounts if it exceeds their Personal Savings Allowance. The amount someone can earn tax-free depends on their Income Tax band.
Starting a second job
People taking on a second job may notice changes to their tax code or overall tax bill. HMRC may need updated income details to make sure the correct amount of tax is being paid across both jobs.
Receiving dividend income
People earning money from shares or investments may need to report dividend income if it exceeds the annual dividend allowance. This can affect people with investment portfolios or shares held outside ISAs.
Making money from social media or online content
Income earned through social media, streaming platforms, sponsorships, or online content creation may also need to be declared. HMRC treats income from influencing, advertising, or digital content in the same way as other self-employed earnings.
Capital gains from investments or assets
People who make profits from selling investments, shares, property, or valuable possessions may need to report capital gains to HMRC. Tax may apply if gains exceed the annual tax-free allowance.
Changes affecting Child Benefit tax charges
Higher earners receiving Child Benefit may need to tell HMRC if their income increases above the High Income Child Benefit Charge threshold. This can lead to additional tax charges or the need to complete a Self Assessment tax return.
People can find more information about reporting income changes, registering for Self Assessment, and checking tax rules on GOV.UK or through Citizens Advice.
