Boost for Side Hustlers as Tax-Free Allowance Set to Increase

Millions of people earning extra income from a side hustle could benefit from a significant tax break from April 2027, following the Government’s announcement that the tax-free trading allowance will rise from £1,000 to £3,000.

The increased allowance means that individuals earning money from activities such as online selling, dog walking or other freelance work will be able to generate up to £3,000 of income before needing to consider tax reporting requirements. The change is expected to benefit up to 1.4 million people, while around 100,000 individuals will no longer need to report their trading income to HM Revenue & Customs (HMRC).

The announcement reflects the growing popularity of side hustles across the UK. According to HM Revenue & Customs (HMRC) data, 2.6 million people earned income through online marketplaces such as eBay, Vinted and Etsy last year.

While the changes will reduce both tax and administrative burdens for many, it is important to remember that tax rules still apply where items are bought and sold with the intention of making a profit. By contrast, selling unwanted personal possessions for less than their original cost is generally not taxable.

The increased allowance is a welcome simplification for those generating modest additional income and should reduce unnecessary reporting obligations for many taxpayers.

If you are operating a side business you should continue to keep accurate records, contact us if you are unsure of your tax position.

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