Your side hustle might be booming, but is your tax return keeping up?

Side hustles are everywhere right now, and I don’t just mean people selling bits on eBay or doing the odd bit of weekend work.

I mean real, revenue-generating projects. Brands, businesses, and entire second careers.

It is not uncommon now to see side projects that start small and grow quicker than expected.

So, let’s clear up when you do need to report income to HM Revenue & Customs (HMRC), and how the tax rules actually work.

Where did the term ‘side hustle’ come from?

Before we dive into the numbers, here is a quick look at the word itself. Hustle has an interesting history.

It originally came from the Dutch word husselen, meaning ‘to shake,’ which evolved in English to mean everything from pushing and working energetically to pulling a fast one.

By the 1950s, side hustle appeared in African-American newspapers in the US, sometimes meaning a legitimate second job, sometimes not.

These days, the phrase has firmly landed in the mainstream, stripped of its dubious origins and now standing for ‘a job on the side.’

The rise of the side hustle economy

Research from global talent firm Robert Walters shows 30 per cent of UK professionals are considering starting a side hustle, and 19 per cent already have one.

The top motivator? Needing extra income, according to 75 per cent of respondents.

Platforms like Etsy, Shopify, and TikTok have made it easier than ever to monetise a hobby or skill.

Adobe Express found that the most popular side hustle sectors today include creative industries (21 per cent), retail and e-commerce (18 per cent) and tech (15 per cent).

Gone are the days of selling old DVDs at the car boot sale as the only way to make a bit of extra income. It is a digital economy, and it is booming.

Do you need to pay tax on your side hustle income?

The first £1,000 of gross income (before expenses) is covered by the trading allowance.

Earn under that, and you may not need to register or report anything.

Go over, and you are in tax territory, even if you are not making much profit.

However, change is on the horizon.

The Government has announced plans to increase the reporting threshold to £3,000, meaning you would not need to file a Self-Assessment tax return unless you exceed that level of income.

However, before you plan on expanding your Shopify empire, the bad news is that this change is not coming any time soon.

The current guidance states it will be introduced within this parliament, which could be as late as 2029.

It is also worth noting that this change won’t reduce your tax liability.

You will still owe tax on earnings above £1,000, and the new rule would only change how and when you declare that income.

So, for now, the £1,000 threshold still applies.

Selling personal items

Selling your own belongings, such as clothing, furniture, or old jewellery, generally doesn’t attract Income Tax.

However, if an item sells for over £6,000, and it has appreciated in value, Capital Gains Tax (CGT) might apply.

Example: sell a painting for £8,000 that you bought for £1,600, and your gain could be taxable.

Flipping, making or importing goods

If you are buying to resell, importing items, or making things to sell, you are probably trading.

Examples include:

• Upcycling furniture and selling it online
• Importing products to sell on Amazon
• Reselling clothes for profit via Vinted or Depop

If you are doing this regularly, even in your spare time, it is treated as a business by HMRC and should be declared.

Providing a service, online or off

Whether you are gardening, dog walking, or babysitting, your income needs to be reported if it exceeds £1,000.

Even small, ad-hoc payments from friends-of-friends can count as taxable if they become regular and exceed the threshold.

Monetising online content

If you earn money through YouTube, podcast sponsorships, or brand deals, it is taxable.

That includes gifts received in exchange for promotion, even if you are not paid in cash.

Example: a beauty influencer receiving free products or affiliate income must declare this as earnings.

Letting out space

Renting out a spare room, your driveway, or a second property?

That is taxable income.

The Rent-a-Room scheme lets you earn up to £7,500 tax-free from a furnished room in your main home, but beyond that, you will need to declare it.

If you are offering short-term lets via Airbnb or similar, keep track of your income, it adds up quickly.

Get clarity before your hustle becomes a hassle

If your side hustle is growing, or you are about to start one, do not set aside your tax obligations.

Speak to us today for financial advice so you can enjoy the rewards of your side hustle without worrying about the tax return.

Kathryn Bridgeman