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The GBP 1,000 trading allowance covers gross income (before costs): under it, no registration, no return. Over it: register for Self Assessment and choose EITHER the allowance OR actual expenses, whichever is bigger. Selling platforms (eBay, Etsy, Vinted) now report sellers' data to HMRC, but personal possessions sold at no profit aren't trading. Class 4 NI only bites once profits pass the NI threshold. Estimate only: not tax advice.
What The Side Hustle Tax Calculator Works Out
- Taxable after trading allowance: gross side income less the GBP 1,000 trading allowance. Under GBP 1,000 there is no registration, no return and no records beyond knowing the number.
- Estimated tax: the taxable amount at your marginal rate, because side income stacks on top of the day job. A basic rate employee's GBP 3,000 Etsy year owes GBP 400 on the GBP 2,000 above the allowance; a higher rate earner owes double.
- Do you need to tell HMRC: over GBP 1,000 of gross income means registering for Self Assessment by 5 October after the tax year you started. Digital platforms such as eBay, Etsy and Vinted report sellers' takings to HMRC, but selling your own possessions for less than you paid is not trading.
- Actual business expenses (advanced): the allowance-or-expenses election is the first genuine tax decision most micro-businesses meet. You take whichever is larger, never both, and can switch each year.
- Business miles (advanced): HMRC's simplified mileage rate of 45p a mile for the first 10,000 miles and 25p after that is added to your expenses, sparing the receipts shoebox for fuel and repairs.
- Deduction used (advanced): shows whether the GBP 1,000 allowance or your actual costs (including mileage) gives the bigger deduction this year.
- Class 4 National Insurance (advanced): 6% on self-employed profits between GBP 12,570 and GBP 50,270 and 2% above, charged on top of income tax. Most side hustles never reach the threshold; Class 2 is now voluntary.
- Set aside each month (advanced): the year's bill divided by twelve, due in one go on 31 January after the tax year ends.
- Payments on account (advanced): once the bill passes GBP 1,000, HMRC also demands two advance payments of half next year's bill on 31 January and 31 July, so the first January bill is 150% of the tax owed. It is the cash-flow ambush every new trader meets first.
- Beyond this: the parallel GBP 1,000 property allowance covers driveway or storage rental, Rent-a-Room shelters lodger income, and a growing hustle eventually meets the VAT threshold and the sole-trader-versus-limited question. Not tax advice.
Official guidance: GOV.UK: trading and property allowances.