Do you pay tax on a side hustle? Short answer
Yes, but probably not on what you’re earning right now. Everyone gets a £1,000 tax-free trading allowance each tax year for side income: selling stuff, freelancing, dog-walking, whatever it is. Earn under that and you owe nothing and don’t need to tell HMRC. Earn over it and you need to register for Self Assessment, though tax is only due on the profit above the allowance, not the whole amount.
The panic you see online (“HMRC is coming for your Vinted sales!”) is mostly noise. Selling your own old clothes has never been taxable. What changed is that HMRC now gets sales data directly from platforms like eBay, Vinted, Airbnb and Depop, so it’s easier for them to spot people who are actually running a business and not declaring it. If you’re genuinely just clearing out your wardrobe, this doesn’t touch you.
Not sure what to start? Our guide to making money online for beginners covers the options that actually pay.
The £1,000 trading allowance, explained
The trading allowance is a flat £1,000 a year you can earn from self-employed or casual income before any tax or reporting kicks in. It covers things like:
- Selling items you’ve made or bought to resell
- Freelance or gig work (delivery driving, tutoring, virtual assistant work)
- Casual services: babysitting, dog walking, gardening
- Hiring out equipment you own
It’s per person, per tax year (6 April to 5 April), and it’s separate from your personal allowance for your main job or salary.
Worked example 1: under the allowance. You do a bit of freelance graphic design on the side and earn £750 across the year. That’s under £1,000, so you owe no tax and don’t need to register for Self Assessment or tell HMRC anything.
Worked example 2: over the allowance. You earn £2,400 from a side hustle (say, reselling trainers). You can deduct the £1,000 allowance, leaving £1,400 of taxable profit. You’ll pay Income Tax and possibly National Insurance on that £1,400 at your normal rate, not on the full £2,400.
Worked example 3: allowance vs expenses. If your actual costs (materials, postage, platform fees) come to more than £1,000, you can claim those instead of the flat allowance, but not both in the same tax year. Add up your real costs first and use whichever is bigger.
Casual earners often stay under it without realising. Something like mystery shopping rarely tips most people over the limit on its own.
When does HMRC actually find out?
This is the bit that worries people most, so let’s be direct about it.
Since January 2024, digital platforms in the UK (eBay, Vinted, Airbnb, Depop, Etsy, Uber, Fiverr and similar) have been legally required to collect seller information and report it to HMRC under international rules agreed by the OECD. The first reports went in by January 2025, and platforms now report annually.
This doesn’t mean every sale gets flagged. The reporting threshold is exactly 30 sales or £1,700 in gross sales in a calendar year, whichever comes first. Below both of those, you’re typically not reported at all. And this is a reporting duty on the platform, not a new tax on you as the seller: even when you are reported, that data just tells HMRC what came through the platform. It doesn’t automatically mean you owe tax. If you’re within the £1,000 trading allowance, or you’re selling your own personal possessions rather than trading, there’s nothing to worry about.
The honest takeaway: this system exists to catch people running an undeclared business through Vinted or eBay, not to tax you for selling your old jumpers. Reporting and paying tax are two different things, and most casual sellers will never owe anything.
This matters most if you buy to resell. Our guide on turning £100 into £1,000 walks through flipping, where the trading line gets crossed quickly.
When and how to register for Self Assessment
If your side hustle income (before expenses) goes over £1,000 in a tax year, here’s what to do:
- Register for Self Assessment with HMRC by 5 October following the end of that tax year. Example: if you crossed £1,000 sometime in the 2026/27 tax year (6 April 2026 to 5 April 2027), you need to register by 5 October 2027.
- File your tax return online by 31 January after the tax year ends, and pay any tax owed by the same date.
- Keep records as you go so filling in the return isn’t a scramble (more on this below).
You don’t need to register the moment you cross £1,000. You’ve got until that October deadline. But it’s worth doing it early once you know you’re over the threshold, since HMRC can take a few weeks to set up your account and send login details.
A change is coming, but not yet. The government has announced its intention, within this parliament, to raise the Self Assessment reporting threshold for trading income from £1,000 to £3,000, taking roughly 300,000 people out of the tax return system entirely. This is a change to the reporting threshold only: the £1,000 trading allowance itself, the amount you can actually earn tax-free, is not changing. As of August 2026, the £3,000 reporting threshold has not been legislated and there’s no confirmed start date. The current £1,000 rule still applies right now. In the interim, HMRC plans a simplified online service for declaring and paying tax on income in the £1,000 to £3,000 band, rather than requiring a full Self Assessment return. We’ll update this page once the £3,000 threshold is legislated and a start date is confirmed.
Remember side income sits on top of your salary, so it is taxed at your highest rate. Our take-home pay calculator shows which band you are in.
Trading vs just selling your own stuff
This is the distinction that actually matters, and it’s simpler than it sounds.
Selling your own possessions (not trading): Clearing out your wardrobe, selling an old phone, offloading books you’ve finished with. HMRC doesn’t consider this trading at all, no matter how much you make from it. You could sell 200 items from your own home for £5,000 and owe nothing, because you’re not running a business, you’re just decluttering.
Trading (potentially taxable): Buying items specifically to resell for profit, making things to sell regularly, or running your selling like a business (consistent volume, marketing, sourcing stock). HMRC uses a set of “badges of trade” to judge this: how often you sell, whether you buy things with the intention to resell, whether you’re doing it for profit rather than convenience, and how organised the activity is.
The one exception worth knowing: if you sell a single personal item (not clothes, typically higher-value things like art, jewellery or a collection) for more than £6,000, Capital Gains Tax rules can apply separately from the trading allowance. Most Vinted and eBay clearouts never get anywhere near this.
Practical rule of thumb: if you’re selling things you bought for yourself and no longer want, you’re fine. If you’re buying stock, sourcing items to flip, or treating it like a proper side business, track your income against the £1,000 allowance.
If you are deliberately building income rather than clearing out cupboards, our guide to the best income-generating assets covers the longer game.
Are cashback and bank switching bonuses taxable?
Generally not. HMRC does not usually tax standard one-off bank switching bonuses, treating them more like a discount or reward than earnings. But the guidance here isn’t entirely clear-cut. Most people using the best cashback apps or switching current accounts for a one-off bonus won’t have anything to declare.
Where it gets greyer is if you’re earning miscellaneous income from multiple sources, including switching bonuses, alongside other side income: combined, that can count towards your £1,000 trading allowance. Repeated, high-volume bonus farming sits more clearly in this territory. For the vast majority of people doing the odd switch here and there, this isn’t something to worry about, but when in doubt, keep a note of what you’ve earned and from where.
Record-keeping basics
You don’t need fancy software for this, just consistency.
- Keep a simple spreadsheet with date, what you sold or earned, amount received, and any costs (postage, materials, fees).
- Save receipts and platform statements. Most platforms let you export a sales history, download it once a year.
- Track from day one of the tax year, not just once you think you might cross £1,000. It’s much easier to look back at running totals than to reconstruct months of Vinted sales in September.
- Separate personal sales from business sales if you do both, even a rough split saves confusion later.
- Keep records for at least 5 years after the 31 January submission deadline, which is HMRC’s standard requirement for Self Assessment.
If your side hustle is genuinely taking off, our guide on how to make £1,000 a week and the wider side income ideas hub cover the earning side. This page is about what happens once the money starts coming in.
