UK to Triple Side-Hustle Tax-Free Trading Allowance to £3,000

The UK government has announced plans to triple the side hustle tax allowance from £1,000 to £3,000 starting in April 2027, offering financial relief and reduced paperwork to an estimated 1.4 million secondary earners.

The measure, confirmed by the chancellor in the latest budget, addresses the growing number of people earning extra money through part-time endeavors, online reselling, tutoring, and pet care amid ongoing pressure on household budgets.

The UK side-hustle tax-free allowance will increase to £3,000, easing reporting rules for 1.4 million people.

Under current regulations, individuals may earn up to £1,000 per year from trading before facing tax liabilities. Anyone exceeding that threshold must pay tax if their total earnings, including primary employment, surpass the £12,570 personal allowance threshold. The upcoming increase will raise the cap to £3,000 before secondary income must be declared.

Government estimates suggest that around 400,000 taxpayers will experience direct savings on their tax bills, with an average reduction of £380. Furthermore, approximately 100,000 individuals will be entirely freed from submitting self-assessment reports regarding their trading revenues.

Secondary income activities have expanded dramatically across the country. Data supplied by HM Revenue and Customs to accountancy firm Lubbock Fine revealed that 2.6 million people earned income through platforms such as Etsy, eBay, and Vinted last year, up from 450,000 in 2024.

Sarah Coles, head of personal finance at AJ Bell, noted that the reform provides both monetary savings and administrative relief. She explained that individuals can concentrate more on their ventures rather than tax filings, noting that people can make £3,000 before considering a self-assessment return. Coles added that individuals earning beyond £3,000 will maintain the option to claim the statutory allowance or deduct actual business overheads and capital expenses when calculating taxable profits.

Consumer champion Jane Hawkes, founder of the Lady Janey blog, described supplementary work as an effective route to monetize spare-time skills, stating that raising the limit removes unnecessary red tape. However, Hawkes cautioned that taxpayers must remain aware of their obligations, particularly the legal difference between commercial trading and offloading personal belongings.

Under existing rules, clearing out personal items such as used clothing does not incur tax if the goods sell for less than their original purchase cost, as no profit is generated. Platforms are already required to report seller records to HMRC for individuals executing at least 30 transactions or receiving €2,000, roughly £1,700, within a calendar year.