𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

With the elevated cost of living, more Brits than ever are finding ways to make money alongside their regular job.

According to PensionBee research, one in two UK adults report having an active side hustle in 2026.

Generally, you can earn up to £1,000 tax-free, as it will fall within your self-employment trading allowance.

Once your earnings go over this threshold, you’ll probably need to start reporting them and paying tax.

Here’s the basic information you should know.

When extra income becomes taxable

If you make over £1,000 and the money is considered trading income, self-employment income, or property income, you must report it.

You have six months after the end of the tax year to register for Self Assessment (so until 5 October), and until 31 January the following year to submit your tax return and pay your bill.

Your tax bill will be calculated based on the total of all sources of income combined, including employed and self-employed.

Tax rates in Scotland are different.

If you earn over £12,570 a year from your side hustle alone, you’ll also need to pay National Insurance contributions at 6 per cent of your earnings (dropping to 2 per cent on earnings over £50,270).

If you earn over £90,000 a year – again, from your side hustle alone – you’ll need to register for VAT too.

Tax for part-time drivers

Whether you drive for Uber, Deliveroo, Amazon Flex or any other delivery service, you’re considered a self-employed contractor and your income is taxable.

You can choose to subtract the £1,000 trading allowance mentioned above or subtract your actual expenses, which can include platform service fees, mobile data while at work, and purchased equipment like a sat-nav.

Vehicle running costs like fuel, insurance, road tax, and repairs can be included either at their actual cost or simplified as 55p per business mile for the first 10,000 miles and then 25p per business mile (for cars and vans). For motorcycles and scooters, the rate is 24p per mile for all business miles, and for bikes and e-bikes it’s 20p.

Remember that costs related to your personal use of the vehicle can’t be deducted.

Tax for online selling

You don’t usually need to pay tax on sales made through Vinted, Depop, or another online marketplace, because you’re probably not making a profit.

Although it might feel like extra money, you’re generally selling items for less than you originally paid for them, so there’s nothing to declare to HMRC.

There are a couple of exceptions:

For more details on reselling and tax, read here.

Tax for social media content creators

Earnings through YouTube, TikTok, OnlyFans, Twitch or any other online or social media platform all count as self-employment income.

The types of earnings can include:

However, remember that legitimate costs can be deducted from your income for tax purposes.

This might include recording equipment, software subscriptions, business-related travel costs or a portion of your broadband bill.

Tax on rental income

If you rent out a furnished room in the home you live in, rental income up to £7,500 is tax-free and doesn’t need to be reported.

Anything over that is considered property income and must be included in a tax return.

Some people also rent out their parking space or driveway for extra cash.

This is considered property income, so it must be reported if it exceeds £1,000.

Tax on other income

There are plenty of other ways to make extra cash in your spare time: pet-sitting, tutoring, completing surveys, participating in user research, or offering freelance services like coding, writing, or graphic design.

The golden rule is that earnings under £1,000 are typically tax-free, but once you cross that threshold you need to register, report, and pay your bill.

It’s smart to set aside at least 20 per cent of your income from the start, to cover future tax bills, and keep a record of all your expenses.

When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.