Prime Minister Andy Burnham has confirmed a £380 boost for 400,000 UK households from April following a major Budget change. As of April 6, 2027, the Government is tripling the tax-free Trading Allowance from £1,000 to £3,000 to help support entrepreneurs to take the first steps in starting a small business.
Under current rules, anyone who gains extra income outside of their regular job, such as from renting out property, creating online content, or selling goods, must register for Self Assessment and file a tax return if their annual earnings total more than £1,000. Everyone in the UK has a tax-free trading allowance of £1,000 additional income outside of their primary employment, but if you exceed this threshold, you must inform HM Revenue and Customs (HMRC).
Budget change triples threshold
It was announced in the Budget on October 28 that this £1,000 threshold will increase to £3,000 from April 2027, giving additional tax relief for people earning income for side hustles. According to the Prime Minister, the higher tax-free Trading Allowance could give around 400,000 households an average of £380 off their tax bill.
Confirming the savings boost in a post on Facebook, Mr Burnham said: "If you’ve got a side hustle, this is for you. Maybe you’re a keen Vinted seller, maybe you do some dog walking or pet sitting in your spare time, maybe you’re a teacher doing some extra tutoring."
"Up to now, if you earned more than £1,000 a year from it, you had to start paying tax on it. But I think if you’re putting in the extra hours, more of that money should stay with you. So, we’ve tripled the amount you can earn from a side hustle without paying a single penny of tax on it."
New online reporting tool by 2029
Following the changes announced in the Budget, HMRC has confirmed that anyone earning more than £1,000 from a side hustle still needs to inform the tax office, but the change from April 6, 2027, means you’ll be able to earn up to £3,000 without filing a tax return. So from next April, if you make between £1,000 and £3,000 you won’t need to file for Self Assessment, but you will still need to tell HMRC and pay tax.
You’ll be able to report your earnings and pay tax through a new online service, which is due to be live by 2029. Anyone earning more than £3,000 will need to file a Self Assessment tax return.
HMRC said: "If you’re earning over £1,000 from side hustles, you’ll still need to tell HMRC. At the moment, you tell HMRC by doing a Self Assessment tax return. However, the UK government has announced that a new online reporting tool is on the way by 2029."
"When it’s live, you’ll be able to use it to tell HMRC if you earn between £1,000 and £3,000 from side hustles – instead of having to do a Self Assessment return. This should be a bit less admin to save you time. We’ll update this page once the new reporting tool is ready to go. But for now, check if you need to tell HMRC about your income for all the information you need."
