The tax-free allowance for side-hustle income will rise to £3,000 in April 2027, up from the current £1,000 limit, according to the chancellor's budget announcement. Up to 1.4 million people could benefit from this change, with an estimated 400,000 seeing their tax bills fall by an average of £380. Around 100,000 people will no longer need to report their trading income to HM Revenue and Customs (HMRC) as a result.
The increase comes at a time when growing numbers of Britons are earning extra money from side hustles. According to data provided by HMRC to accountancy firm Lubbock Fine, 2.6 million people made money selling goods through platforms including eBay, Vinted and Etsy last year. This represents a dramatic increase from just 450,000 in 2024. Popular side-hustle activities include reselling clothes, tutoring and dog-walking.
Currently, people can earn up to £1,000 annually without paying tax, but earnings above this threshold may be subject to tax if their total income, including their main job, exceeds the £12,570 personal allowance. Sarah Coles, head of personal finance at AJ Bell, said the more generous allowance would reduce administrative burden. She noted that the higher threshold means people "can make £3,000 before you have to think about doing a self-assessment tax return". Those earning more than £3,000 can choose to use the allowance or deduct business expenses and capital costs when calculating their tax liability.
Jane Hawkes, a consumer champion and founder of the Lady Janey blog, described side hustles as an effective way to generate extra income from hobbies and skills. However, she emphasised the importance of understanding tax obligations, particularly the distinction between selling personal belongings at a loss and trading for profit, to avoid breaching HMRC rules. Selling personal items for less than the original purchase price is not taxable as no profit is being made.
New rules that came into force last year now require online platforms to report seller information to HMRC. The tax authority receives data about any seller who completed 30 or more sales or earned €2,000 (approximately £1,700) on any platform in the previous year. For savers and those earning modest incomes, the higher allowance means more of their side-hustle earnings will be kept without triggering tax obligations or administrative requirements.