UK Tax-Free Side-Hustle Allowance to Triple to £3,000
The trading allowance announced in the budget rises from £1,000 to £3,000 in April 2027. Up to 1.4 million people could benefit.
Britons will be able to earn £3,000 a year from a side hustle without paying tax from April 2027. The chancellor confirmed in the budget that the tax-free "trading" allowance will rise from the current £1,000. Up to 1.4 million people could benefit.
The change targets people who earn extra money from hobbies or reselling clothes, with tutoring and dog-walking also among the popular routes at a time when household finances are under pressure. Today people can earn up to £1,000 a year from a side hustle without paying tax. Above that, tax may be owed if total income, including a main job, is above the £12,570 personal allowance.
Of the 1.4 million, an estimated 400,000 will see their tax bill fall, by an average of £380. About 100,000 will no longer have to report their trading income to HMRC.
Growth in online selling
Last year 2.6 million people made money selling goods on platforms such as eBay, Vinted and Etsy, according to HMRC data supplied to accountancy firm Lubbock Fine. In 2024 the figure was 450,000.
Rules that came into force last year require platforms to tell HMRC about their sellers and what they earned. HMRC now receives data on every seller who made 30 sales or €2,000 (about £1,700) on any platform in the past year.
Selling your own clothes or other items is not taxable if they go for less than you originally paid, because you are not making a profit.
Reaction
Sarah Coles, head of personal finance at AJ Bell, said that for people with a small side hustle the more generous allowance "doesn't just save tax, it also takes the hassle of admin off their plate". She said it means people can make £3,000 before they have to think about a self-assessment tax return.
Those earning more than £3,000 will be able to choose between using the allowance and subtracting business expenses and capital costs when calculating their profits for tax purposes, Coles said.
Jane Hawkes, a consumer champion and founder of the Lady Janey blog, said side hustles turn hobbies and skills into extra cash and that the higher allowance "should make this easier without wholly unnecessary red tape". She added that it is important people understand the difference between selling unwanted belongings and trading for profit, so they do not fall foul of HMRC rules.
Source: The Guardian