As the festive season approaches, many people are turning to side hustles such as running Christmas market stalls, creating social media content, or selling items online to boost their income. However, HM Revenue and Customs (HMRC) has issued a warning that those who fail to comply with tax rules could face fines and penalties.
Under UK law, individuals have a trading allowance of £1,000 per tax year, meaning earnings from side hustles up to this amount are tax-free. Any earnings above this threshold must be declared and taxed. For the 2024-25 tax year (6 April 2024 to 5 April 2025), anyone earning more than £1,000 from side hustles must register for self-assessment as a sole trader, file a tax return, and pay any tax due by 31 January 2026.
Sales made this Christmas will fall into the 2025-26 tax year and must be declared, with tax paid by the end of January 2027. HMRC's 'Help for Hustles' campaign provides guidance on when tax rules apply, including distinctions between selling personal belongings and items made for profit. The £1,000 allowance applies to all side hustle activities combined, and it is based on turnover before expenses, not profit.
Those with no other income may not need to pay tax if they earn under £12,570 a year, which is the personal allowance. Additionally, allowable expenses such as office costs can be deducted from the tax bill. HMRC warns that unpaid tax could lead to a large unexpected bill and urges traders to stay on top of their tax affairs and contact HMRC if they have not paid for previous tax years.
