
Earning extra money on the side, whether through selling online, offering services, or renting out space, can be a fantastic way to boost your income.
While side hustles are a great way to generate extra income, earning too much can leave you at the mercy of the tax man.
Understanding the rules can help you avoid any unwelcome letters from HM Revenue & Customs (HMRC).
Selling your old belongings
Got a wardrobe clear-out or a garage full of unwanted furniture?
Selling your personal possessions usually does not come with a tax bill, as long as you are simply getting rid of items you already own.
However, if you sell something valuable for over £6,000, you may need to pay Capital Gains Tax (CGT) on the profit.
For example, if you sell a rare vinyl record for £9,000 after originally purchasing it for £2,500, your £6,500 gain could be taxable.
Buying and reselling for profit
If you are regularly buying items to resell, HMRC may view this as trading, meaning your profits are subject to tax.
Some common side hustles that fall into this category include:
- Snapping up bargains at charity shops or car boot sales and selling them for a profit.
- Importing goods in bulk and selling them online.
- Restoring and reselling furniture.
If this sounds like you, it is worth checking whether you need to register as self-employed and start reporting your income.
Offering services?
From dog walking and babysitting to tutoring or freelance work, any service you get paid for is classed as income.
Even if you are just doing odd jobs for friends or neighbours, HMRC requires you to report earnings that go beyond the £1,000 tax-free threshold.
For example, if you use an online platform to find gardening gigs or sell digital services like graphic design, your earnings count towards your taxable income.
Making money online? HMRC is watching
If you create content on social media, stream on platforms like Twitch, or run a blog that generates income, you need to report your earnings. This includes:
- Ad revenue
- Brand deals & sponsorships
- Freebies received in exchange for promotion
For instance, if a skincare brand sends you products worth £500 as part of a paid collaboration, that counts as income and may be taxable.
Renting out a room or property? Know your limits
If you are making money from renting out a spare room, garage, driveway, or even an Airbnb property, you need to declare your rental income.
The Rent a Room scheme allows you to earn up to £7,500 tax-free per year from renting out a furnished room in your main home.
If you share the income with someone else (e.g., a partner), the allowance is split, meaning you each get £3,750 tax-free.
If you are unsure whether your side hustle is taxable, getting expert advice now could save you a headache later.
Need help figuring out your tax obligations? Get in touch with our team today.