This is a busy time of year for the thousands of people who earn a bit of extra income from a festive side hustle such as running a stall at a Christmas market or selling items online.
The UK’s army of crafters, artisans and designers are being urged to check if they need to tell HM Revenue and Customs about their earnings.
Those who do not comply with the rules could risk being landed with an unexpected tax bill and penalties.
Under UK law, everyone has a trading allowance of £1,000 each tax year, which means you can earn up to that much on top of your main job without paying tax.
As the festive season approaches, HMRC’s Help for Hustles campaign is reminding anyone earning extra income from activities such as selling handmade Christmas decorations or items that have been bought to sell on that they will need to tell the tax authorities if they earn more than this limit.
The campaign’s guidance highlights the important distinction between simply decluttering your home by selling unwanted personal belongings – something that does not usually need to be reported to HMRC – and trading activities such as making items to sell for profit, which may be taxable.
Anyone who earned more than £1,000 from side hustles in the 2024-25 tax year (6 April 2024 to 5 April 2025) will need to register for self-assessment as a sole trader and file a tax return and pay any tax due by 31 January 2026.
This Christmas’s sales will fall into the 2025-26 tax year and need to be declared, and any tax on them paid, by the end of January 2027.
This £1,000 tax-free allowance for each tax year applies to all trading activities combined. So someone earning £600 from craft sales and £500 from posting content online would need to register as their total exceeds £1,000. This is the figure earned before factoring in expenses – it is not the same as profit.
However, just because you register for self-assessment, this does not necessarily mean you will actually owe any tax. Your personal allowance means you can earn £12,570 a year before you must pay any tax.
Also, when you come to do your tax return, you may be able to deduct some costs (“allowable expenses”) from your income, which can lower your tax bill, provided these costs relate entirely to your side hustle. These might include things such as “office costs” (for example, stationery or phone calls) or website costs. The HMRC website has more information on allowable expenses.
While HMRC’s current publicity focuses on Christmas side hustles, the rules apply all year round and cover a wide range of ways that people make money outside their main job.
The main categories of side hustle are selling things, providing a service and creating content. Examples of selling include regularly buying items from car boot sales or charity shops, etc with the aim of selling them for more than you paid; upcycling secondhand furniture as a hobby with the intention of selling it; and buying vintage clothing in bulk that you then resell individually via online platforms or apps to make a profit.
Service side hustles can include dog walking or pet-sitting, gardening, babysitting or childminding, tutoring, taxi driving or ride-sharing, delivering food or parcels, hiring out equipment and renting out a parking space or garage.
The rules also apply to many of the UK’s online content creators and influencers, with growing numbers of people now earning extra cash from making videos, social media posts and podcasts.
Crucially, when someone is working out their income from creating online content, they must include the value of any gifts or services they received from promoting products online. That is because these count as income. Let’s say that several brands paid you £700 last year to post product review videos online, and they sent you these items, worth £300, which you got to keep for free. You also made £200 from ads that appeared on your videos. This means that overall, you had a total income of £1,200 from your content creation side hustle.
However you earn your cash, it is vital to keep proper records of the money you make from a side hustle. “It’s your responsibility to keep full and accurate records of all sales, income and business expenses – even if you use a tax agent or accountant. You’ll need this information to complete your tax returns properly,” HMRC says. So that means things such as invoices, receipts and bank statements.
