Self Assessment for Side Hustlers: Turning Extra Income into a Tax-Friendly Plan

Side hustles — whether it’s selling crafts online, freelance work, or renting out assets — are increasingly common. While earning extra income is great, many side hustlers underestimate the need to report it. Filing a Self Assessment ensures your earnings are declared correctly, helping you stay compliant with HMRC and avoid unexpected penalties.

Income Thresholds You Need to Know

• Trading Allowance: £1,000 per tax year

• Above £1,000: You must declare all side hustle income on your Self Assessment

Tip: Even if you earn less than £1,000, it can be beneficial to report it, especially if you want to claim allowable expenses.

When Your Side Hustle Triggers Self Assessment

You may need to file if your side hustle involves:

• Selling goods or services online (e.g., Etsy, eBay)

• Freelance work or consulting

• Renting out property, equipment, or other items for profit

• Any other activity generating untaxed income outside PAYE

Allowable Expenses

Claiming legitimate expenses reduces your taxable profits. Examples include:

• Supplies and materials needed for your side business

• Home office costs (portion of rent, utilities, internet)

• Marketing and advertising costs

• Software or subscriptions used for your business

Tip: Only claim expenses that are “wholly and exclusively” for your side hustle.

Record-Keeping Tips

Good record-keeping is essential for stress-free tax filing:

• Keep separate accounts for side hustle income and expenses

• Maintain receipts and invoices for all claims

• Track all payments and bank deposits carefully

Conclusion

Running a side hustle can be profitable — but staying on top of your Self Assessment is key. By keeping accurate records, claiming allowable expenses, and filing on time, you can minimise your tax liability, remain compliant with HMRC, and focus on growing your extra income.