More people than ever are earning extra income on top of their main employment. For some, it is a way to boost household finances. For others, it is a creative outlet that has started to generate money. Whatever the motivation, it’s important to understand when that extra income needs to be declared and what tax rules apply.
How people earn extra income
Most extra income falls into three broad categories.
Selling products: This includes buying items to resell, making crafts or artwork, or selling products online through marketplaces and social media. While selling unwanted personal items is usually not taxable, selling with the intention of making a profit is treated as trading.
Providing a service: This covers activities such as tutoring, cleaning, gardening, dog walking, freelance work, consulting, beauty services, or gig economy work. Even if the work is occasional or done in one's spare time, it can still count as taxable income.
Creating content - Income from content creation is becoming increasingly common. This can include money from advertising, sponsorships, subscriptions, affiliate links or gifts received through platforms. If content earns money, it is treated in the same way as other trading income.
When you must tell HMRC
If your total income from all side hustles combined is more than £1,000 in a tax year, you must tell HMRC
The £1,000 limit is a single trading allowance. It is not £1,000 per activity. For example, earning £600 from selling products and £500 from tutoring gives a total side income of £1,100, which means you must notify HMRC.
You must tell HMRC by 5 October following the end of the tax year in which you went over the £1,000 limit. In most cases, this means registering for Self-Assessment and completing a tax return.
Keeping things simple
The key is awareness and record-keeping. Keep track of what you earn and any related expenses, check whether you are over the £1,000 limit, and tell HMRC on time if needed. Taking small steps early helps avoid problems later and keeps your extra income working for you, not against you.
If you or someone that you know is earning some extra income in addition to their main employment, and they would like some advice, then please do contact us by calling 01623 490 120 or emailing