HMRC has issued an urgent warning for anyone earning more than £1,000 in extra income through side hustles, such as selling handmade crafts, creating digital content, or renting out property. Under current rules, individuals can earn up to £1,000 per tax year without paying tax, thanks to the trading allowance. However, earnings above this threshold must be declared to HMRC via a self-assessment tax return.
Myrtle Lloyd, HMRC's Director General for Customer Services, emphasised the importance of understanding tax obligations. 'If you earn more than £1,000 from these activities, you may need to complete a Self Assessment tax return,' she said. 'Filing early puts you in control – you will know exactly what you owe, can plan your payments, and avoid the stress of the January rush.'
Online platforms like eBay and Vinted are now required to share sales data with HMRC if users sell at least 30 items or earn €2,000 (roughly £1,700). This does not automatically mean tax is owed; it only applies if the seller is considered to be trading, i.e., selling items with the intention of making a profit. Selling unwanted household items is not taxable.
Currently, a self-assessment form is required for extra income over £1,000 per tax year, but this threshold will rise to £3,000. For earnings under £3,000, a simpler online form will be introduced by 2029 to declare earnings, though the amount of tax owed will remain unchanged.
Other reasons for filing a self-assessment include income from self-employment, dividends, savings interest, or capital gains. HMRC advises filing early to plan payments, with the tax bill due by 31 January.
