How much tax do I pay on a side hustle in the UK?

Your side hustle profit is added on top of your other income and taxed at the band it lands in: 20 percent for most basic rate earners, 40 percent if your day job already puts you in the higher band. Class 4 National Insurance adds 6 percent on profits between 12,570 and 50,270 GBP. The first 1,000 GBP of gross trading income each year is covered by the trading allowance.

Do I need to tell HMRC about my side hustle?

If your gross trading income is 1,000 GBP or less in the tax year, normally no. Above 1,000 GBP you must register for Self Assessment by 5 October following the end of that tax year, then file and pay by 31 January. Online platforms now report seller income to HMRC, so the figure you declare should match what the platforms can see.

How much should I set aside for tax from a side hustle?

A useful rule of thumb is 25 to 30 percent of profit for basic rate earners, or 42 percent or more if your day job puts you in the higher rate band. The exact figure depends on your total income; a tracker that stacks your profit on top of your employment income gives you a live number instead of a guess.

Can I claim expenses and the 1,000 GBP trading allowance?

No, you choose one each year: deduct the flat 1,000 GBP trading allowance, or deduct your actual allowable expenses including mileage, whichever leaves you better off. Resellers with real costs usually beat the allowance; low-cost service side hustles often do better with the flat 1,000 GBP.

Side Hustle Tax UK: How Much to Set Aside, and How to Track It All Year

The question every side hustler asks, usually at about 11pm in January, is the one that should have been answered in the first week: how much of this money is actually mine? Whether you sell on marketplaces, freelance around a day job, deliver, tutor or walk dogs, the rules are simpler than they look. What catches people out is not the maths, it is the tracking.

The 1,000 GBP trading allowance, your first checkpoint

Everyone gets a trading allowance of 1,000 GBP of gross trading income per tax year. Under that, you normally have nothing to report at all. Over it, you must register for Self Assessment by 5 October after the tax year ends, and you get a choice each year: deduct the flat 1,000 GBP allowance from your income, or deduct your actual expenses and business mileage instead. One or the other, never both.

The right choice depends on your costs. A reseller buying stock and paying postage usually has well over 1,000 GBP of real costs, so actual expenses win. A tutor or dog walker with little outlay usually keeps more with the flat allowance. If you track both all year, the choice makes itself in January.

The band your profit really lands in

Here is the part most people get wrong: side hustle profit is stacked on top of your employment income. Your day job usually uses your whole Personal Allowance, so the side hustle is often taxed from its first pound.

Your situation (2025/26 figures)	Tax on 10,000 GBP of profit
Day job pays 30,000 GBP, profit stays in the basic band	2,000 GBP at 20 percent
Day job pays 60,000 GBP, profit lands in the higher band	4,000 GBP at 40 percent
No other income, profit is your only earnings	Personal Allowance covers the first 12,570 GBP

On top of income tax, Class 4 National Insurance takes 6 percent of profits between 12,570 and 50,270 GBP, and 2 percent above that. Modest side hustles with profit under 12,570 GBP pay no Class 4 at all.

So how much should you set aside?

A workable rule of thumb: 25 to 30 percent of profit if you are a basic rate earner, 42 percent or more if your day job already puts you in the higher band. Move that share of every payout into a separate pot the day it lands and January is already paid for.

A rule of thumb is a guess, though, and the real number moves with your income. The TidyDocs Side Hustle Tax Tracker is an Excel workbook built exactly for this: log income, expenses and mileage as they happen and its Tax Estimate tab stacks your profit on top of your employment income, compares the trading allowance against your actual costs automatically, and shows a live figure for the tax and Class 4 to set aside, for both the 2025/26 and 2026/27 tax years.

The records that make it painless

HMRC expects records of all business income and expenses, kept for at least five years after the 31 January deadline. In practice that means three simple habits:

Log income when it lands. Gross sale on one line, platform fees as an expense line, so your records match the platform statements HMRC now receives from marketplaces every January.
Log costs weekly. Stock, postage, fees, the business share of phone and internet. Five minutes on a Sunday beats a shoebox in January.
Log business miles. Post office runs and stock collection add up fast: HMRC's approved rate is 45p per mile for 2025/26, rising to 55p from 6 April 2026. A dedicated mileage log and claim calculator handles the rates and the 10,000-mile threshold for you.

When the return itself comes round, a full Self Assessment spreadsheet takes the same approach to your whole tax year, and our guide to the records HMRC actually wants covers the paperwork side in depth.

Going deeper

Set-aside percentages and record keeping are the mechanics. If you want the full picture, from registering with HMRC through allowable expenses, the trading allowance decision, payments on account and your first return, our ebook Side Hustle Tax UK walks through the whole journey in plain English for 6.99 GBP, delivered as a PDF straight after checkout.

Keep every pound tracked

The Side Hustle Tax Tracker logs your income, expenses and miles, then tells you exactly how much to set aside, all year round.

Get the tracker on Etsy
Or read the full Side Hustle Tax UK ebook

None of this is regulated tax advice, and the estimate any tracker gives you is a planning figure, not a filing. But the difference between a stressful side hustle and a calm one is rarely the tax itself. It is knowing the number all year instead of meeting it for the first time in January.