Side Hustles and Tax – What You Need to Know in 2025

Side hustles are booming. Whether it’s selling on Vinted or eBay, driving for a ride-hailing app, freelancing, or running a small craft business, more people are earning extra on the side. But with that comes tax responsibilities that can sometimes be overlooked.

The £1,000 Trading Allowance

Good news first: if your extra income is under £1,000 in a tax year, you may not

need to tell HMRC. This is called the trading allowance. But once you earn more than that, you may need to register for Self Assessment and declare it.

When You Need to Pay Tax

• Above the allowance? You’ll need to report your side income.

• Expenses matter – you can deduct certain costs before tax is calculated.

• Beware the bracket – extra income could push you into a higher tax band, meaning a bigger bill than expected.

  
  

Common Missteps

• Assuming selling personal items online is always tax-free (it isn’t if you’re trading regularly).

• Forgetting that gig economy platforms now report earnings directly to HMRC.

• Not setting aside money for tax — leading to surprises at the end of the year.

  
  

Smarter Ways to Handle Side Income

• Keep simple records from day one.

• Put a portion of earnings aside for tax to avoid a shock later.

• Use digital tools or apps to track sales and expenses.

  
  

Making It Work for You

Having a side hustle is a great way to boost your income, but tax shouldn’t be an afterthought. A little organisation now means you can enjoy the extra money without future headaches.