HM Revenue and Customs (HMRC) has issued a tax bill warning to people with more than £1,000 of extra earnings from a 'side hustle'. Anyone who gains extra income outside of their regular job, such as renting out property, creating online content, or selling goods, must register for Self Assessment and file a tax return if their annual earnings from this total more than £1,000.
£1,000 trading allowance threshold
In the UK, everyone has a tax-free trading allowance of £1,000 additional income outside of their primary employment, but if you go above this threshold then you must tell the tax office. Under HMRC rules, if you have more than £1,000 of extra earnings you must declare this by registering as self-employed and submitting a Self Assessment tax return.
While the deadline to file a Self Assessment tax return for income from side hustles between April 6, 2025 and April 5, 2026, isn't until January 31, 2027, HMRC has issued a reminder to those exceeding the earnings threshold that this must be completed.
HMRC reminder on social media
In a post on X this week, HMRC said: "Hobby or hustle? If your bakes are earning more than just a handshake, it could count as a side hustle."If you earn over £1,000 in a year in additional income, you need to tell us. Find out what applies to you."
If you have a side hustle but you earn £1,000 or less per year from trading, then you don't need to pay any tax on it. But if your earnings exceed £1,000 annually, you must tell HMRC and may need to pay tax on the money that you make.
Registering and filing deadlines
You don't need to leave your Self Assessment until the last minute; if you start sorting it now, HMRC will automatically generate a tax bill based on the information you've submitted and you'll still have until January 31 to pay it. As such, this gives you plenty of time to prepare for paying your tax bill by the January deadline.
If you regularly sell goods or provide a service through an online platform, HMRC recommends that you check the guidance about selling online and paying taxes on GOV.UK. A link is also available on the HMRC app in the 'news' section under the 'communication' tab to help you decide if your activity should be treated as a trade and if you need to complete a Self Assessment tax return.
If you do need to tell HMRC about your additional income and need to pay tax on the money you've made, you'll need to register for Self Assessment by October 5.
Penalties for late filing or payment
HMRC said: "Extra earnings are your responsibility to tell HMRC about, not your main employer’s. Income from side hustles isn’t included on your payslip. If you don’t tell HMRC about those extra earnings you might be given a penalty.
"You have a single £1,000 tax-free trading allowance (for each tax year) and anything you earn from different types of side hustle all counts towards this. For example, if you earn £800 from content creation and £500 selling crafts online, that adds up to £1,300 from trading. You would need to tell HMRC and pay tax on this as it’s above the £1,000 trading allowance.
"Firstly, you should check if you need to tell HMRC about additional income. If you do need to pay tax on the money you’ve made from your side hustle, you will need to register for Self Assessment – you will need to do this by 5 October."If you don’t pay the right amount of tax, you may get a penalty. And late tax payments can mean the amount of interest you have to pay may grow – so the longer you put off paying, the more you may owe."
If tax returns aren’t submitted on time you’ll be hit with an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time. The penalties then continue to increase the longer you leave it, with taxpayers facing daily penalties if they haven’t filed three months after the deadline. At this point, HMRC will issue additional daily penalties of £10 per day, up to a maximum of £900. This will increase yet again after six months with a further penalty of 5% of the tax that is due, or £300 - whichever is higher. After 12 months, another 5% - or a £300 charge, whichever is greater - will be added.
If you pay your tax late, you’ll also get penalties of 5% of the tax unpaid at 30 days, six months and 12 months. If tax remains unpaid after the deadline, interest will also be charged on the amount owed in addition to the penalties above. Customers who are unable to meet the tax return deadline need to tell HMRC before January 31 and the government department said it will treat those with reasonable excuses fairly.
