Do I pay tax on my side hustle? The £1,000 trading allowance explained

Selling your own things or trading?

Selling your old clothes on Vinted or a sofa on Facebook Marketplace is not usually trading, and you do not pay Income Tax on it. Buying things to sell on, or making things to sell, usually is. HMRC looks at the whole picture using a list it calls the badges of trade. In plain terms, the questions are:

• Are you trying to make a profit? Selling for more than you paid, on purpose, points to trading.
• How often do you sell? Lots of similar sales look like a business; a one-off clear-out does not.
• What are you selling? Things bought only to sell on, rather than to use or enjoy, point to trading.
• Is it linked to something you already do? A mechanic selling cars, for example.
• Did you work on it first? Repairing, upcycling or repackaging to sell for more suggests trading.
• How did you sell it? A shop, adverts or a steady flow of listings look like a business.
• How did you pay for it? Borrowing to buy something you then have to sell suggests trading.
• How long did you keep it? A quick resale looks more like trading than selling something you owned for years.
• How did you get it? Something you were given or inherited is less likely to be trading than something you bought.

No one question decides it. Selling a valuable personal item, such as jewellery or a painting, for more than you paid can bring Capital Gains Tax instead of Income Tax. If you are unsure, HMRC can help you decide.

Gig work counts too: delivery driving, dog walking, tutoring, cleaning or freelance design are all services you are paid for.

The £1,000 trading allowance

Everyone gets a £1,000 trading allowance each tax year. It is for all your trading income added together, not £1,000 per platform. It covers self-employment, casual work such as babysitting or gardening, and hiring out your own equipment.

• Takings of £1,000 or less: the allowance covers them. You may not need to tell HMRC, but keep a record of what you took in.
• Takings over £1,000: you can take the £1,000 off your takings instead of your actual costs, whichever leaves the lower profit. You cannot claim both.

For example, £3,000 of sales with £200 of costs gives a profit of £2,800 using costs, but £2,000 using the allowance, so the allowance is better. £6,000 of sales with £2,500 of costs gives £3,500 using costs, which beats £5,000 using the allowance. The allowance cannot be used for income from your employer, or from a partnership or company you or a connected person controls. For the full list of costs you can claim, see the sole trader expenses guide.

When to register and file

The tax year runs from 6 April to 5 April. If your takings for a year are more than £1,000, register for Self Assessment by 5 October after that year ends, then file online and pay by 31 January.

The Self Assessment checklist covers the records you need and the penalties for missing a deadline.

Platforms reporting your sales to HMRC

Since 1 January 2024, UK online platforms such as marketplaces and gig apps have had to collect details about their sellers and report what each seller earned to HMRC. They report each calendar year by the following 31 January, so the first reports, for 2024, went to HMRC by 31 January 2025.

• Who is left out: sellers of goods who make fewer than 30 sales in the calendar year and receive less than €2,000 (about £1,700) for them. Make 30 sales, or receive €2,000 or more, and you will be reported. The exclusion does not apply to services or to renting out property or vehicles.
• What is reported: your name, address, date of birth and tax reference, and what you received after the platform's fees, split by quarter. The platform sends you a copy.
• What it means: being reported does not mean you owe tax. The tax rules did not change: you pay tax only if you are trading (or make a capital gain), and the £1,000 trading allowance still applies.

Platform reports run January to December, but your tax return runs 6 April to 5 April, so the figures will not match your return. Keep your own records on the tax year.

What to put aside

On a taxable profit, you pay Income Tax and, once your profit is over £12,570, Class 4 National Insurance. For 2026/27 that is:

• Income Tax at your usual rate: 20% up to £50,270 of total income, 40% above that (England, Wales and Northern Ireland). If a job already uses your £12,570 Personal Allowance, all your side profit is taxed.
• Class 4 National Insurance: 6% on profits between £12,570 and £50,270, and 2% above. This is worked out on your self-employed profit alone, not added to your wages.
• Class 2 National Insurance: nothing to pay. With profits above £7,105 it is treated as paid; below that you can choose to pay £3.65 a week to keep your National Insurance record, which counts towards your State Pension.

A simple habit is to move 20% of every payment into a separate savings pot if you are a basic-rate taxpayer, or 40% if your wages already take you into the higher rate. If your bill is £1,000 or more, HMRC will also ask for payments on account towards next year, so your first January bill can be bigger than you expect. The checklist explains how.

The Side Hustle Income and Tax Tracker logs each sale and cost, picks the allowance or your costs, and works out what to put aside at your own tax rate.

Sources

Every rate and rule on this page was checked on GOV.UK on 8 November 2026.

• Selling goods or services on a digital platform
• HMRC Business Income Manual: badges of trade (BIM20205)
• Working for yourself
• Tax-free allowances on property and trading income
• Self Assessment: who must send a tax return
• Self Assessment tax returns: deadlines
• Income Tax rates and allowances, 2026/27
• Self-employed National Insurance rates, 2026/27
• Payments on account

Planning tool, not tax advice. This guide explains the general GOV.UK rules in plain English. Your own position can differ: check GOV.UK, ask HMRC, or speak to an accountant if you are unsure.