If you’re running a side hustle in the UK, understanding side hustle tax UK rules is essential. Whether you’re freelancing, selling products online, or renting out a room, knowing what taxes apply will help you stay compliant and avoid surprises from HMRC.
In this guide, we’ll break down the key taxes side hustle businesses pay in the UK, from income tax and National Insurance to allowable expenses. Plus, discover how Skyrock Accountants in Maidstone can support you every step of the way.
- Do You Need to Tell HMRC About Your Side Hustle?
- What Taxes Will You Pay?
- What About Expenses?
- Common Mistakes Side Hustlers Make
- Get Help from Skyrock Accountants
Do You Need to Tell HMRC About Your Side Hustle?
If your side hustle income exceeds £1,000 per tax year (before expenses), you must register as self-employed with HMRC. This is known as the Trading Allowance.
Registration should be done by 5 October after the end of the tax year you started earning.
What Taxes Will You Pay?
Income Tax
Your side hustle income is added to your other earnings, and you’ll pay tax based on your total income for the year. For 2024/25, the personal allowance is £12,570.
National Insurance Contributions
You may be liable for:
- Class 2 NI: £3.45 per week if profits exceed £6,725
- Class 4 NI: 9% on profits between £12,570 and £50,270, then 2% above that
VAT
If your side hustle earns over £90,000 in a rolling 12-month period, you must register for VAT.
What About Expenses?
You can deduct allowable business expenses such as materials, marketing, travel, and home office costs to reduce your taxable profit.
Common Mistakes Side Hustlers Make
- Not registering with HMRC when required
- Mixing personal and business finances
- Missing tax deadlines
- Failing to save for the tax bill
Don’t Go It Alone — Skyrock Your Finances 🚀
Understanding side hustle tax UK rules can be confusing, but you don’t have to navigate it alone. Skyrock Accountants in Maidstone specialise in helping side hustlers, freelancers, and small business owners with tax compliance and planning.
👉 Ready to get your side hustle tax sorted? Contact Skyrock Accountants today for your free consultation.
