"Side hustle" is not a tax term. HMRC cares about three questions: is the activity a trade, how much did you receive, and do you have to tell it. This guide takes them in order, with the thresholds from gov.uk.
Step 1: is it a trade at all?
Selling things you own is not usually trading. gov.uk's guidance on income from online platforms says that if you are selling personal possessions, you probably do not pay Income Tax on them. Personal possessions are things you own for your own use, such as clothes, furniture, jewellery and phones. A different tax can apply to a big sale: if an item, or a matching set of items, sells for more than £6,000, you may need to pay Capital Gains Tax.
Buying or making things to sell, or offering services for payment, is where trading begins. HMRC does not apply one test. Its Business Income Manual (BIM20205) lists nine badges of trade:
- Profit-seeking motive
- The number of transactions
- The nature of the asset
- Existence of similar trading transactions or interests
- Changes to the asset
- The way the sale was carried out
- The source of finance
- Interval of time between purchase and sale
- Method of acquisition
The manual says the presence or absence of one badge is unlikely, by itself, to give a conclusive answer. In practice, buying stock to resell, repeating sales regularly, advertising and aiming to make a profit point towards a trade. Occasional one-off sales of things you were given or inherited point away from it.
Step 2: add up everything you received
If it is a trade, the £1,000 trading allowance applies to your total trading income for the tax year (6 April to 5 April), not to each activity separately. gov.uk says to add income from selling goods, providing services and creating online content together. Count what you received, or expect to receive in the tax year, before expenses. Gifts or services received instead of money count at the value of what you would have paid for them. Some platforms report by calendar year, so you may need to convert their figures to the tax year first.
| Total trading income in the tax year | What it generally means |
|---|---|
| £1,000 or less | Full relief; no need to tell HMRC; keep records |
| Over £1,000 | You need to tell HMRC; normally register for Self Assessment as a sole trader |
See the £1,000 trading allowance for the full-versus-partial relief mechanics and for who cannot use it.
Step 3: tell HMRC and register
Over £1,000 means registering for Self Assessment by 5 October after the tax year in which you passed the limit. For 2025/26 that date was 5 October 2026. Our registration guide covers the process. gov.uk's registration page says you could get a penalty if you tell HMRC after the deadline.
What digital platforms tell HMRC
New reporting rules came into force on 1 January 2024. Under gov.uk's guidance on selling on a digital platform:
- Platforms collect seller details and income yearly, and report them to HMRC by the following January.
- Your details are not reported if you make fewer than 30 sales of goods in a calendar year and receive less than about 2,000 euros (about £1,700) for those sales.
- Platforms must give you a copy of what they reported.
- A report does not mean you owe tax. Tax applies if you are trading or making a capital gain.
Treat the platform copy as a cross-check, not as your tax figure. The platform report is calendar-year gross sales; your tax position depends on the tax year, your costs and whether you are trading at all. If the platform figure is higher than yours, be ready to explain the difference (for example, items sold at a loss, or refunds).
Other things the allowance touches
gov.uk notes that profit worked out with the trading allowance reduces your income for tax credits, the High Income Child Benefit Charge and student loan repayments, but not Universal Credit. If your income is close to a threshold, check before you decide how to report.
Practical checklist
- Keep a simple log: date, platform, item, sale price, fees, cost, and whether it was your own property.
- Separate stock bought to resell from things you owned.
- Total your gross receipts for the tax year each April.
- If you are over £1,000, register, then work out whether the allowance or actual expenses gives the lower profit.
- Keep platform annual statements with your records.
How ac-co helps
If your side hustle needs a return, ac-co drafts it from your connected bank and books, shows the full computation and files only after you approve it. Whether an activity is a trade is your call, based on the badges above, and a tax adviser can help if the facts are borderline.