Updated for 2025/26 Tax Year

Your Side Hustle Earned You Money.
How Much Do You Actually Keep?

Selling on Vinted? Freelancing on the side? Driving for Deliveroo? Your side income is taxed at your marginal rate — and it's probably more than you think. Find out in 30 seconds, completely free.

Calculate My Tax Now
Official HMRC 2025/26 rates
Takes 30 seconds
No sign-up required

Your Details

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Deduction Method

Your Tax Breakdown

See Your Real Take-Home

Enter your side hustle income on the left to get an instant breakdown of what you owe and what you keep.

Under £1k? You may owe nothing
Most side hustlers pay 20-30% effective tax
Takes 30 seconds — no sign-up needed

How Side Hustle Tax Works in the UK

Understanding the basics can save you hundreds

1

The £1,000 Trading Allowance

Earn under £1,000/year? You pay zero tax and don't even need to tell HMRC. Covers casual selling, freelance gigs, and hobby income.

2

Stacked on Your Day Job

Side hustle profit is added on top of your salary. Your employer already uses your Personal Allowance — so side income hits your marginal rate (20% or 40%).

3

National Insurance Too

Self-employment profits over £12,570 trigger Class 4 NICs: 6% on profits up to £50,270, then 2% above. Separate from your employer's NI.

4

Self Assessment & Payment

Register with HMRC and file a return by 31 January. It's online and simpler than most people think.

Smart Tax Tips for Side Hustlers

Legal ways to keep more of what you earn

Track Every Expense

Phone bills, equipment, travel, software — they all reduce your taxable profit. Use FreeAgent or QuickBooks to make it painless.

Know the Deadlines

5 Oct: register. 31 Jan: file & pay. Miss them and automatic fines start at £100.

Save 25–35% As You Go

Set aside 25–35% of every payment into a separate account. No nasty January surprises.

Use Trading Allowance Wisely

Expenses under £1,000? The Trading Allowance saves more. Our calculator picks the best option automatically.

Working From Home?

Claim household bills or HMRC's flat rate: £10/mo (25–50 hrs), £18/mo (51–100 hrs), £26/mo (101+ hrs).

Pension Contributions

Reduce taxable income with pension contributions. Near a band threshold? It could drop you into a lower rate.

Frequently Asked Questions

Everything you need to know about side hustle tax

Do I need to pay tax on my side hustle?

It depends on how much you earn:

  • Under £1,000/year — The Trading Allowance covers it. Zero tax and generally no need to tell HMRC (unless you need to claim losses, Tax Free Childcare, or Maternity Allowance).
  • Over £1,000/year — You must register for Self Assessment and may owe income tax and National Insurance depending on your total income.
What is the Trading Allowance?

A £1,000 tax-free allowance for self-employment income each year. If your side hustle income exceeds £1,000, you choose whichever saves more:

  • Deduct the £1,000 allowance — simple, no receipts needed
  • Deduct actual expenses — better if your costs exceed £1,000

Our calculator picks the best option automatically.

How is it taxed alongside my day job?

Your side hustle profit is stacked on top of your employment salary. Because your employer already uses your Personal Allowance, side income is taxed at your marginal rate:

  • 20% basic rate — up to £50,270 total income
  • 40% higher rate — £50,271 to £125,140
  • 45% additional rate — above £125,140

Even modest side income can be taxed at 40% if your salary is near the threshold.

Do I pay National Insurance?

Class 4 NICs apply to self-employment profits:

  • 6% on profits between £12,570 and £50,270
  • 2% on profits above £50,270

Class 2 NICs are no longer compulsory from 2024/25. NICs are calculated on your side hustle profit only — separate from your employer's contributions.

When do I register for Self Assessment?

Key dates to remember:

  • 5 October — deadline to register with HMRC (after the tax year you started)
  • 31 January — deadline to file your return online and pay your tax bill

For the 2025/26 tax year, register by 5 Oct 2026 and file by 31 Jan 2027.

What expenses can I claim?

Anything spent "wholly and exclusively" for your side hustle:

  • Equipment, tools & materials
  • Software & subscriptions
  • Marketing & advertising
  • Business travel (not commuting)
  • Phone & internet (business portion)
  • Office supplies & postage
  • Professional fees & insurance
  • Training & courses
  • Use of home as office

Keep all receipts — digital photos count.

What are the late filing penalties?

HMRC penalties escalate quickly:

1 day late
£100 automatic fine
3 months late
£10/day up to £900
6 months late
5% of tax owed or £300 (whichever is greater)
12 months late
Further 5% or £300

File on time to avoid these. HMRC also offers payment plans if you can't pay in full.

Sole trader or limited company?

Sole trader is the right choice for most side hustlers. It's simple to set up and run.

A limited company only makes financial sense when:

  • Profits consistently exceed £40,000+ (varies by circumstance)
  • You can benefit from dividend tax optimisation
  • The savings outweigh accountancy fees (£800–£2,000/year)

For most side hustlers, the extra admin and costs outweigh any tax savings.

Don't Leave Money on the Table

Thousands of side hustlers overpay every year. Find out exactly what you owe.

Calculate My Tax Now