Side Hustle Tax Calculator
2026-27 tax year · PAYE + self-employment combined
Enter 0 if you are fully self-employed with no PAYE income
Leave 0 to use the £1,000 trading allowance instead (calculated automatically)
How is side hustle income taxed?
If you earn money from self-employment alongside your regular job, your side hustle profits are added to your PAYE salary and taxed as a combined total. This means your side income is taxed at whatever rate applies to the top of your total income — often 20% or 40% depending on your combined earnings.
You must also pay Class 4 National Insurance on self-employment profits above £12,570: 6% up to £50,270 and 2% above that. If your profits exceed £12,570, Class 2 NI (£3.45/week, £179.40/year) also applies. You declare and pay this through Self Assessment, which you must register for if your self-employment gross income exceeds £1,000.
The £1,000 trading allowance
If your gross side hustle income (before expenses) is £1,000 or less, it is completely tax-free — you don't need to report it to HMRC or register for Self Assessment. This is the trading allowance.
If your gross income exceeds £1,000, you can choose to deduct the £1,000 trading allowance instead of your actual expenses. This simplifies record-keeping but is only beneficial if your actual allowable expenses are less than £1,000. If your real expenses are higher, you should claim them instead.
What counts as an allowable expense?
Allowable expenses are costs wholly and exclusively for your business. Common examples for side hustles include: materials and supplies used in your work, equipment and tools (or a portion if used for both personal and business), software subscriptions used for the business, professional fees (accountant, legal), a proportion of home office costs if you work from home, travel costs (not commuting), and marketing and advertising.
Personal expenses are not allowable. Costs with mixed personal and business use can only be claimed for the business portion. HMRC can ask for evidence of expenses claimed.
Self Assessment registration
You must register for Self Assessment if your gross self-employment income exceeds £1,000 in a tax year. Registration must be done by 5 October following the end of the tax year (5 October 2027 for the 2026-27 tax year). Failing to register on time can result in penalties.
Once registered, you file a tax return by 31 January following the tax year (31 January 2028 for 2026-27). You pay any tax owed by the same deadline. Payments on Account (advance payments) may also be required if your tax bill exceeds £1,000.
Frequently asked questions
Do I need to tell my employer about my side hustle?
Check your employment contract — some contain clauses restricting outside work, particularly if it competes with your employer's business or uses company resources. You are not legally required to inform HMRC or your employer about side income as long as you declare it through Self Assessment. Your employer will not be told about your self-employment income by HMRC.
What if my side hustle makes a loss?
Self-employment losses can be offset against other income in the same year or carried forward against future self-employment profits. If your side hustle makes a loss and you have PAYE income, you may be able to claim a tax refund. This requires filing a Self Assessment return.
Is selling on eBay or Vinted taxable?
Selling personal possessions (things you own and no longer want) is generally not taxable. However, if you buy goods specifically to resell — or if you sell goods you have made — this is treated as trading and is taxable. HMRC receives data from online platforms including eBay, Etsy, Airbnb and others about seller income, so undeclared trading income is increasingly detectable.
Can I claim expenses before knowing if I'll exceed £1,000?
You make the choice between the trading allowance and actual expenses when you file your Self Assessment return. Keep records of both throughout the year so you can choose whichever is more beneficial when you file. If your expenses are higher than £1,000, claiming them reduces your taxable profit further.