Do I Need to Tell HMRC About My Side Income?
If you earn money on the side, the answer is sometimes yes, but not always. HMRC says side income can include things like selling online or doing casual jobs. It can also include charging people to use your equipment, renting out property or part of your home, or earning money from online content. However, not every pound of side income means you automatically need to file a tax return. The key questions are what type of income it is and how much you received. Also, you need to consider whether you are actually trading.
For many people, the best starting point is HMRC’s own check if you need to tell HMRC about additional income tool. If you are unsure whether you need to complete a tax return, HMRC also has a check if you need to send a Self Assessment tax return service.
What HMRC means by side income
HMRC’s guidance covers more than most people expect. It can include money from selling goods, doing casual work, providing services, creating online content, or renting out land or property. However, that does not mean all of this is taxed in the same way. Also, it does not mean every person with extra income needs to register straight away.
The real issue is whether the income falls into a category HMRC expects you to report. Someone occasionally selling unwanted personal possessions is in a very different position from someone regularly selling goods for profit, freelancing on evenings and weekends, or monetising a social media audience. HMRC’s guidance on income from online platforms makes that distinction quite clearly.
The £1,000 rule people often misunderstand
One of the biggest areas of confusion is the trading allowance. HMRC says this is a tax exemption of up to £1,000 a year for trading income such as self-employment, casual services, or hiring out personal equipment. If your annual gross trading income is £1,000 or less, you generally do not need to tell HMRC. This applies unless an exception occurs or you already have to complete a tax return for another reason.
The word gross matters. HMRC means the income before expenses are deducted. So if your side hustle brought in £1,200 and you spent £400 on costs, you are still over the threshold because your gross income was more than £1,000.
There is also a separate property allowance of up to £1,000 for certain property income. That is relevant if your extra income comes from renting out a room, driveway, holiday let, or another property-related source.
When you probably do need to tell HMRC
In practical terms, you are much more likely to need to tell HMRC if your gross trading income is over £1,000 or your property income is over £1,000. You are also more likely to need to tell them if you are carrying on an activity with the intention of making a profit, or you already need to file a tax return for another reason. Furthermore, HMRC says people may need to tell them about income even where no tax ends up being payable. So, it is a mistake to think “no tax due” automatically means “nothing to report.”
This matters particularly for online sellers, creators and gig workers. HMRC’s current guidance says you are probably trading if you buy goods intending to resell them for profit, make items to sell, provide services for payment, or earn money from online content. In addition, HMRC notes that you can be employed and self-employed at the same time.
Selling online does not automatically mean tax
A lot of people worry that selling anything online means they have triggered tax. That is not correct. HMRC distinguishes between selling personal possessions and trading. If you are simply clearing out old clothes, unwanted household items or personal belongings, that is not the same as running a business.
Where it changes is when the activity starts to look commercial. If you are buying stock to resell, upcycling items for profit, making products to sell, or doing it regularly with a view to earning money, that is much more likely to count as trading. What’s more, HMRC’s online platforms guidance gives examples that are directly relevant to people using eBay, Etsy, Vinted, social media, and similar platforms.
What about creators, freelancers and casual work?
HMRC’s side-income guidance also covers creating online content, doing casual jobs, and providing services. So if you are earning from affiliate links, sponsored content, freelance work, tutoring, delivery driving, gardening, repairs, dog walking, or similar work, you should not assume it falls outside the rules just because it started as a hobby or only takes a few hours a week.
In many of these cases, the question is not whether the work feels “official”. The question is whether it creates taxable trading income. If it does, the trading allowance and the Self Assessment rules need to be considered properly.
What to do if you need to declare it
If you need to file a tax return, HMRC says you must usually tell them by 5 October after the end of the tax year if you have not sent a return before. The normal online filing deadline is 31 January. Missing those dates can lead to penalties and interest, so it is worth dealing with the issue early rather than waiting until the deadline is close.
You also need to keep records. HMRC says self-employed people should keep records of all sales and income and all business expenses. They need supporting evidence such as receipts, invoices and bank statements. Additionally, those records generally need to be kept for at least 5 years after the 31 January submission deadline. You can find HMRC’s guidance on what records to keep and the wider business records if you’re self-employed rules on GOV.UK.
If you are self-employed and not relying on the trading allowance, you may also be able to deduct allowable expenses when working out your taxable profit. But if you use the trading allowance instead, you generally cannot also deduct expenses from that same income. That is one of the reasons it is worth checking the numbers rather than assuming the allowance is always the best option.
The real mistake is leaving it too late
Most people do not run into problems because they had side income. They run into problems because they guessed, assumed it was too small to matter, or left it until after HMRC deadlines had passed. The earlier you look at the position, the easier it usually is to sort out.
If your extra income is clearly below the relevant threshold and fits within HMRC’s rules, that may be the end of it. But if you are over the threshold, trading regularly, receiving income through online platforms, or simply not sure where you stand, it is better to get clarity now than deal with a tax problem later.
At Merranti, we help people work out whether their side income needs to be declared, whether they need to register for Self Assessment, and how to do it properly. If you have side income and you are not sure what HMRC needs to know, speak to us before the deadlines creep up.
