How Much Can I Earn Before I Need to Tell HMRC?

The Accounted Business Team·3 March 2026·8 min read

It is one of the most commonly asked questions by anyone earning a bit of money on the side: how much can I actually make before HMRC needs to know about it? Whether you are selling on Vinted, picking up freelance gigs, tutoring at weekends, or renting out your driveway, there is a point at which your extra income becomes HMRC's business.

The good news is that the rules are not as complicated as you might think. There are clear thresholds, and once you understand them, you can plan your finances with confidence. Let us break it all down.

The £1,000 Trading Allowance

The headline number you need to know is £1,000. This is the trading allowance, and it applies to income from self-employment, casual services, or any kind of trading activity.

If you earn £1,000 or less from trading in a tax year (6 April to 5 April), you do not need to:

Register as self-employed
File a Self Assessment tax return
Pay any tax on that income

It is completely automatic. You do not need to apply for it or even mention it to HMRC. You simply carry on.

What counts as trading income?

Trading income is broadly defined. It includes:

Selling goods you have made, bought to resell, or grown
Providing services (cleaning, tutoring, consulting, design work, etc.)
Freelance or contract work
Commission-based income
Regular selling on platforms like eBay, Etsy, Amazon, or Depop

What it does not include is selling your own personal possessions. If you are clearing out your wardrobe and selling old clothes on Vinted, that is not trading income — those are personal items you originally bought for yourself. The distinction matters, and we cover it in more detail in our article on what counts as trading income.

Gross income, not profit

One important detail: the £1,000 threshold is based on your gross income (total sales), not your profit. So even if you only made £200 profit but had £1,100 in sales, you have exceeded the threshold.

This catches some people out, particularly those selling physical products where the cost of materials or stock is high. If you are in that position, you will want to register as self-employed so you can claim expenses instead of relying on the trading allowance.

The £1,000 Property Allowance

There is a separate £1,000 allowance for property income. This covers things like:

Renting out your driveway or parking space
Letting someone use a room for storage
Renting out land or other property

If your property income is £1,000 or less, you do not need to declare it. And yes, this is separate from the trading allowance — so in theory, you could earn £1,000 from trading and £1,000 from property income, totalling £2,000, without needing to tell HMRC about either.

However, if you are renting a room in your home to a lodger or through Airbnb, the Rent-a-Room scheme might be more beneficial — it gives you up to £7,500 tax-free.

What Happens at £1,001?

Once your trading income exceeds £1,000 in a tax year, you need to:

Register as self-employed with HMRC — you can do this online, and our step-by-step guide walks you through it.
File a Self Assessment tax return — this is due by 31 January following the end of the tax year.
Pay any tax and National Insurance that is owed.

You still get to use the trading allowance, though. When you file your return, you can either:

Deduct the £1,000 trading allowance from your gross income, or
Deduct your actual expenses from your gross income

You cannot do both, so it is worth working out which option gives you a lower taxable profit.

Example

Let us say you earn £4,000 from a side hustle and have £600 in expenses.

Using the trading allowance: Taxable profit = £4,000 – £1,000 = £3,000
Using actual expenses: Taxable profit = £4,000 – £600 = £3,400

In this case, the trading allowance gives you the better result. But if your expenses were £2,500, you would be better off claiming actual expenses (taxable profit = £1,500 instead of £3,000).

Does the Personal Allowance Matter?

Yes, but it works differently from the trading allowance.

The personal allowance for the 2025/26 tax year is £12,570. This is the amount of income you can earn before you start paying income tax. It applies to all your income — employment, self-employment, pensions, savings interest, and so on.

So if your only income is from a side hustle and you earn £10,000 in profit, you would not pay any income tax because you are within the personal allowance. But you would still need to register as self-employed (because you exceeded the £1,000 trading allowance) and file a Self Assessment.

If you are employed and earning £25,000 from your day job, your personal allowance is already used up through PAYE. In that case, every pound of side hustle profit above the trading allowance is taxed at the basic rate of 20%.

Here is a summary of the 2025/26 income tax bands:

Personal Allowance: £0 – £12,570 (0%)
Basic rate: £12,571 – £50,270 (20%)
Higher rate: £50,271 – £125,140 (40%)
Additional rate: Over £125,140 (45%)

The HMRC Reporting Rules for Online Platforms

Since January 2024, online platforms like eBay, Etsy, Vinted, Depop, Airbnb, and Uber are required to report seller data to HMRC. This means HMRC can see how much you are earning through these platforms, even if you have not told them yourself.

This does not change the rules — you still only need to register and file if you exceed £1,000 in trading income. But it does mean that HMRC is much more likely to notice if you are over the threshold and have not declared your earnings.

The platform reporting rules apply to anyone who either:

Makes 30 or more sales in a calendar year, or
Earns more than €2,000 (roughly £1,700) in a calendar year

If you hit either of those, the platform will share your details with HMRC. It is not an automatic trigger for tax — selling personal items is still not taxable — but it does put you on HMRC's radar.

Do I Need to Tell My Employer?

This is a common worry, and the answer is: it depends on your contract.

Some employment contracts include clauses about outside work or secondary employment. These might require you to:

Inform your employer about any side work
Get written permission before taking on additional income
Avoid working for competitors

HMRC does not tell your employer about your side hustle, and your Self Assessment is completely private. But it is worth checking your contract to make sure you are not breaching any terms.

From a tax perspective, HMRC might adjust your PAYE tax code if your Self Assessment shows additional income. This means your employer might see a change in your tax code, but they would not know the reason for it.

Special Cases and Exemptions

A few types of income have their own rules and are worth mentioning separately.

Gambling and matched betting

Gambling winnings (including matched betting) are not taxable in the UK, regardless of the amount. HMRC does not consider gambling to be a trade, so there is no need to declare it.

Selling personal possessions

As mentioned earlier, selling your own belongings is not trading income. Whether you sell an old sofa on Facebook Marketplace or a vintage jacket on eBay, you do not owe tax on it unless you sell an individual item for more than £6,000 (which could trigger Capital Gains Tax).

Rent-a-Room scheme

If you rent a furnished room in your home, you can earn up to £7,500 per year tax-free under the Rent-a-Room scheme. This is far more generous than the £1,000 property allowance, but it only applies to rooms in your main home. Our detailed guide on the Rent-a-Room scheme explains how it works.

Bank interest and dividends

Savings interest is covered by the Personal Savings Allowance (£1,000 for basic rate taxpayers, £500 for higher rate). Dividends have their own £500 allowance for 2025/26. These are separate from the trading and property allowances.

Keeping Records — Even Under £1,000

Even if you are under the £1,000 threshold and do not need to register, it is worth keeping basic records of your income. Why? Because:

You need to know when you cross the threshold
HMRC could ask for evidence that you were under £1,000
If your side hustle grows, you will want records from the start

Something as simple as a spreadsheet or a note on your phone can work. But if you want to save yourself the hassle, tools like Accounted can track your income automatically and alert you when you are approaching key thresholds — so you never get caught off guard.

Quick Reference Summary

| Situation | Action needed | |-----------|--------------| | Trading income under £1,000 | Nothing — tax-free | | Trading income over £1,000 | Register as self-employed, file Self Assessment | | Property income under £1,000 | Nothing — tax-free | | Renting a room in your home | Consider Rent-a-Room scheme (up to £7,500 tax-free) | | Selling personal belongings | No tax unless an item sells for over £6,000 | | Gambling winnings | Not taxable |

The bottom line is this: if you are earning a little extra on the side, the UK tax system gives you a decent amount of breathing room. But once you go past £1,000, it is time to get registered, keep records, and file your return. The sooner you get on top of it, the less stressful it will be.

Accounted helps UK sole traders stay on top of their bookkeeping and tax. Start your free 30-day trial at getaccounted.co.uk

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