If you earn extra money from a side hustle — selling on Vinted, freelance work, dog walking, content creation, or anything else outside your main job — UK tax rules give you a £1,000 tax-free trading allowance before you need to declare anything at all.
How the allowance works
You can earn up to £1,000 in gross income from self-employed or side-hustle activity each tax year with no tax to pay and, in most cases, no need to register for Self Assessment or tell HMRC. This is separate from your Personal Allowance and applies on top of any employed income you have.
What counts towards the £1,000
The allowance is based on gross income, not profit — so if you sold £900 worth of items but spent £200 on stock, your gross income for allowance purposes is still £900, and you'd remain under the threshold. This matters because it means you cannot deduct expenses first and then check against the allowance.
Once you go over £1,000
If your gross side income exceeds £1,000 in a tax year, you need to register for Self Assessment and declare it. You then have a choice: claim the £1,000 trading allowance as a flat deduction against your income, or deduct your actual allowable business expenses instead — whichever gives you the better (lower) taxable profit. You cannot claim both on the same income.
A common mistake
Many side hustlers assume the £1,000 allowance means they never need to think about tax until they are earning serious money. In reality, once you cross that threshold even by a small amount, the full gross income (not just the excess over £1,000) needs to be considered when working out how to declare it — so it's worth tracking your side income from the start rather than being caught out mid-year.
Track your side income against the threshold
See exactly how much extra tax your side hustle creates once you're over the £1,000 allowance.
Open PAYE + Side Hustle Calculator
Frequently asked questions
Does the £1,000 allowance apply per side hustle or in total?
It applies to your total self-employment/side income combined, not per activity. If you have two side hustles earning £600 and £500, that is £1,100 combined — over the allowance — not two separate allowances.
Do I still need to tell HMRC if I earn under £1,000?
Generally no, if your gross side income is under £1,000 and you have no other reason to file a return, you do not need to register for Self Assessment or declare it. Keeping basic records is still sensible in case your income grows.
What if my expenses are higher than my income?
If your actual expenses exceed £1,000, you may be better off claiming your real expenses instead of the flat allowance, since you cannot use both together against the same income — work out which gives a lower taxable profit.
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