When do I need to tell HMRC about my side income?

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Generating income through a side hustle or side gig is a great achievement. Yet getting money also leads to annoying questions like “Do I need to tell HMRC about this?” and  “Am I going to get into trouble if I don’t tell the taxman?”

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Speaking to over 100 side hustlers, we’ve been told many of you are confused about which figures you need to use to calculate the limits HMRC sets. In the following paragraphs, we’ll cover the key numbers to keep track of so you know exactly when you need to tell HMRC about your side income.

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Do I use income or profit?

HMRC uses your income to decide whether you need to tell them about your side hustle or side gig. This means that the limits they use are based on the money you’ve received, not the profit you get from your side hustle.

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You could be losing money on your side hustle or side gig in a year and still be required to tell HMRC.
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So how much income do I need to make to tell HMRC?

Confusingly HMRC has different limits depending on your side hustle. In general, HMRC allows you to earn £1,000 a year before you have to declare your income if you’re employed. Some side hustles are not included in this allowance:

• Matched betting and casino offers: winnings from casinos or betting websites are not included (they’re tax-free!)

• Selling old possessions: excludes things you bought to sell on, collectables, antiques and items you make a large profit on

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Not all income is created equal. Some side hustles have different limits at which you need to tell HMRC:

• Renting out a furnished room in your home: no need to tell HMRC if you earn less than £7,500 a year

• Renting out your land, driveway, or another home: no need to tell HMRC if you earn less than £1,000 a year

• Trading stocks and shares: no need to tell HMRC if you earn less than £12,300 a year (this one is particularly confusing as this is based on PROFIT, not INCOME)
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What do I do when I have multiple side hustles?

This is where it gets complicated. Depending on your side hustles, you may need to use a combination of different limits. Let’s go through an example:

• If you sell on Etsy and rent out your spare bedroom you can’t combine the two limits. Your Etsy income needs to be less than £1,000 and your spare bedroom income needs to be less than £7,500 if you don’t want to tell HMRC.

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‍Tax is hard!

It’s almost like HMRC wants you to do it wrong. This is why we started Earnr, to help side hustlers and micro-businesses spend less time on tax and more time on growing their business.

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Why not try our nifty calculator which helps you check if you need to tell HMRC about your side hustle income - click here

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For all the tax geeks 🤓 that want to learn a bit more:

Read more about the tax-free allowance on trading and property income here
Read more about the rent a room scheme here
Read more about why gambling is not taxed here
Read more about why selling old possessions are not included here
Read more about capital gains tax on stocks and shares here

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