Making money on the side? The tax-free limit is tripling to £3,000. Here's what you need to know
Why it hits youLots of people your age earn from reselling, tutoring, babysitting, dog-walking, commissions or freelance work. Most will never owe a penny, but getting it wrong can mean a fine. This is the plain-English version.
From April 2027 you'll be able to make £3,000 a year from side hustles without paying income tax, up from £1,000. Selling your old stuff on Vinted was never taxed. But if you buy to resell, make things to sell or get paid for a service, there are rules, and apps now tell HMRC about bigger sellers.
The Facts
What everyone agrees on
Before anyone spins it. Every one of these is checkable.
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From 6 April 2027 the Trading Allowance rises from £1,000 to £3,000, letting individuals receive up to £3,000 of trading and miscellaneous income tax-free each year. HM Treasury, Budget 2026 ↗
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The allowance covers your total gross income from one or more trades: it's one limit per person, counted before costs. GOV.UK ↗
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If your trading income is above the allowance you must register for Self Assessment and file a tax return. You can then deduct either the allowance or your actual expenses, not both. GOV.UK ↗
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Occasionally selling your own unwanted things online isn't trading, and there's no tax to pay on it. HMRC ↗
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You may count as trading if you buy things to resell, make things to sell for a profit, or offer a paid service through an app or website, such as delivery driving. HMRC ↗
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Since 1 January 2024 selling apps have had to collect sellers' details, including their National Insurance number, and report their sales to HMRC each January. Sellers with fewer than 30 sales and under €2,000 (about £1,700) in a year aren't reported. GOV.UK ↗
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Being reported by an app doesn't automatically mean you need to fill in a tax return. HMRC ↗
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Selling items regularly, whether online, at car boot sales or through adverts, can count as working for yourself, and you may need to tell HMRC. GOV.UK ↗
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Separately, everyone has a £12,570 Personal Allowance: the amount of total income you can have before paying income tax. GOV.UK ↗
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If you need a tax return for the first time, you must register for Self Assessment by 5 October after the end of the tax year, or you could get a penalty. GOV.UK ↗
Every Side · 1 of 3
Why the government is doing it
Help for people taking “the first steps” in business
The Budget says tripling the Trading Allowance is meant to support entrepreneurs “to take the first steps in starting a small business”. It sits alongside a new Young Entrepreneurs Allowance pilot, which the government says is because the people who start businesses are too often “those with access to family support” rather than those with the best ideas. A higher limit also means fewer people with small side incomes have to deal with tax returns.
- HM Treasury, Budget 2026
Side labels are our editorial calls for now. How we'll rate lean
Every Side · 2 of 3
The catches
It's £3,000 in total, and it counts sales, not profit
The allowance is per person, not per hustle: everything you earn from trading and side work adds up towards one limit. It's measured on what comes in, before costs, so £3,500 of sales that cost you £2,000 to make is still over the limit. Go over and you must register for Self Assessment and fill in a tax return, then choose to take off either the allowance or your real costs, not both. And it doesn't start until April 2027: until then the limit is still £1,000.
- GOV.UK
- HMRC
Side labels are our editorial calls for now. How we'll rate lean
Every Side · 3 of 3
What HMRC says
“If you are not trading… there is no tax due”
HMRC has tried hard to kill the myth of a “side hustle tax”. Since 2024 apps like eBay and Vinted have to report sellers to HMRC once they make 30 or more sales or about £1,700 in a year, but HMRC says that's not a new tax and being reported doesn't automatically mean you owe anything. Its deputy chief Angela MacDonald said: “if you are not trading and just occasionally sell unwanted items online – there is no tax due.”
- Angela MacDonald, HMRC
Side labels are our editorial calls for now. How we'll rate lean
The Blindspot · what the headlines skip
Clearing out your wardrobe isn't a business. Reselling trainers might be
The line HMRC draws is about intent. Selling things you bought for yourself and no longer want is not trading. Buying stock to flip for profit, or making things to sell, can be.
The Blindspot · what the headlines skip
Going over £3,000 doesn't always mean paying tax, but it does mean paperwork
If side income takes you over the Trading Allowance, you still have to register and file a tax return. But income tax only kicks in above your £12,570 Personal Allowance, so many students and young people with little other income may end up owing nothing. The paperwork is the bit not to skip.
The Blindspot · what the headlines skip
Nothing changes until April 2027
The new £3,000 limit starts on 6 April 2027. For anything you earn before then, including this Christmas, the limit is still £1,000.
Your Call
- Why the government is doing it: not yet
- The catches: not yet
- What HMRC says: not yet
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