Side hustles are a great way to boost your income, but they can come with tax obligations.
You could sell goods online, rent out property, or offer different services.
Whatever your extra source of income, it is important to understand when to report and pay tax on your earnings.
Even if your side hustle is occasional or part-time, assessing whether you need to report your earnings is essential.
Selling personal possessions
Selling personal items such as clothes, furniture, or jewellery typically doesn’t incur Income Tax.
However, you might need to pay Capital Gains Tax (CGT) if an item is worth more than £6,000.
For instance, you sell an old painting for £8,000 that you originally bought for £1,600. With a gain of £6,400, you may need to report this to HM Revenue & Customs (HMRC).
Selling goods
If you are buying items to resell, upcycling, or making products to sell, you are likely trading and will need to report this income. Examples include:
- Upcycling furniture for resale
- Importing goods to sell on online marketplaces
- Reselling clothes from car boot sales for a profit
Providing a service
Income from services like gardening, babysitting, or dog walking must be reported. This includes payments received via online platforms.
For example, babysitting services advertised on an app may require you to report income to HMRC.
Creating online content
Earnings from online content, such as videos, podcasts, or social media influencing, are taxable.
Even gifts or free services received in exchange for promoting products can count as income.
For example, a beauty influencer who receives products for reviews and advertising income must declare this to HMRC.
Renting out land or property
Rental income from letting out a spare room, driveway, or a second property is taxable.
For instance, renting out a spare room via an online platform for short-term lets requires you to report this income.
Why reporting matters
Failing to report side hustle income can lead to penalties or fines.
If you are unsure about your obligations, our team can help you calculate what tax should be (if any), and ensure you are compliant with HMRC rules. Contact us today.
