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Is the side hustle tax threshold going up to £3,000?

Published · Figures are for the 2026–27 tax year

The short answer

Not yet, and it is not a tax cut. In March 2025 the government announced plans to raise the Self Assessment reporting threshold for trading income from £1,000 to £3,000. The change is planned by the end of 2029, and no start date has been set. The £1,000 tax-free trading allowance is not changing, so income between £1,000 and £3,000 will still be taxed. People in that band will be able to declare it through a new, simpler online service instead of a full tax return. Until then, the £1,000 rule applies as normal.

What was announced

On 11 March 2025 the government said it would raise the Self Assessment reporting threshold for trading income from £1,000 to £3,000 of gross income, "within this Parliament". It expects the change to take up to 300,000 people out of filing tax returns, including people selling vintage clothes, dog walkers, gardeners, drivers and content creators.

Of those, around 90,000 will have no tax to pay at all. The rest will pay what they owe through a new simple online service instead of a full return.

What has not changed

The headline number is easy to misread. Two different thresholds are involved:

  • The trading allowance is how much trading income is tax-free. It is £1,000 a year, and it is not changing.
  • The reporting threshold is when you have to file a Self Assessment return. That is the one moving from £1,000 to £3,000.

So when the change arrives, someone with £2,500 of side-hustle income will still owe tax on it. They just will not need the full tax return to pay it.

When it starts

The change is planned by the end of 2029. The government has committed to making it "within this Parliament", and the current Parliament must be dissolved no later than July 2029. No exact start date has been announced, and HMRC needs to build the new reporting service first.

Until it is announced and in force, nothing is different. If your trading income in a tax year is over £1,000, you must register for Self Assessment by 5 October after the tax year ends and file a return by 31 January.

A worked example

Sam walks dogs at weekends alongside a £27,000 office job. In 2026–27 they earn £2,400, and spend £200 on leads, treats and poo bags.

Today:

  • Sam's income is over £1,000, so they register for Self Assessment and file a return.
  • The £1,000 allowance beats £200 of costs, so taxable profit is £2,400 − £1,000 = £1,400.
  • Sam's salary has used their Personal Allowance, so the profit is taxed at 20%: £280.

Once the £3,000 threshold is in force: Sam still owes £280. The difference is that they could report and pay it through the new online service instead of a full Self Assessment return.

Is there a new side hustle tax?

No. This rumour started in January 2024, when new reporting rules began for online platforms. Sites like Vinted, eBay, Etsy and Airbnb now have to send HMRC details of their sellers. For people selling goods, that only happens once they make 30 or more sales or receive more than 2,000 euros (about £1,700) in a calendar year. Platforms for services and rentals, such as Airbnb, report regardless of how much you earn.

HMRC put it plainly: "It is not a new tax". What is taxable has not changed. Selling your own unwanted belongings is still not trading, however much HMRC can see.

What to do now

  • Under £1,000 of trading income: nothing to do. It is tax-free and you do not need to tell HMRC.
  • Over £1,000: register for Self Assessment and file as normal, whatever you have read about £3,000.
  • Either way: keep a record of what you earn and spend, so you know which side of each line you are on.

Keeping track

With two thresholds, a rumour and a change that has not started yet, the safest thing is to know your own numbers. Hamster is a free Android app that totals your side-hustle income and costs through the year and shows the tax building up, so it is never a surprise. With Premium, it also alerts you the moment you pass £1,000.

Quick answers

Is the side hustle tax threshold going up to £3,000?
It is planned, but not yet in force. The threshold for having to file a full Self Assessment return is due to rise from £1,000 to £3,000 of trading income by the end of 2029. No start date has been set, so for now you must still register once your trading income is over £1,000.
Will the first £3,000 of side hustle income be tax-free?
No. The tax-free trading allowance stays at £1,000. The change is about how you report income between £1,000 and £3,000, not whether you pay tax on it.
Is there a new side hustle tax?
No. Since January 2024 online platforms such as Vinted, eBay and Airbnb have had to collect seller information and report it to HMRC, but HMRC has said it is not a new tax and the tax rules did not change. Selling your own unwanted things is still not taxable.
What should I do if I earned between £1,000 and £3,000 this year?
Register for Self Assessment and file a return as normal. The higher threshold has not started, so the current rules apply to the 2025–26 and 2026–27 tax years.

Sources

This is general information, not personal tax advice. Rules and rates change — check the linked GOV.UK pages or speak to an accountant about your own situation.