Written by the TaxTune Editorial Team · Reviewed by our qualified accountants · Updated for 2026
The quick answer You can earn up to £1,000 of trading income and £1,000 of property income in a year tax free through the trading and property allowances. Cross either, or have other untaxed income, and you usually need to register for Self Assessment and declare it. HMRC increasingly receives data from platforms, so undeclared income is often spotted.

When side income becomes taxable

  1. Under £1,000 of trading income. Covered by the trading allowance, usually with nothing to report.
  2. Over £1,000 of trading income. Register for Self Assessment and report the income, claiming the allowance or your expenses, whichever is better.
  3. Property income. A separate £1,000 property allowance works the same way, with the Rent a Room scheme for letting a furnished room.
  4. Other untaxed income. Interest, dividends and freelance work above the allowances also need reporting.

Why declaring matters

Online platforms now share seller and income data with HMRC, so gaps are increasingly visible. Declaring correctly, and claiming your allowance or expenses, keeps you safe and often means little or no tax on a modest side income. Ignoring it risks penalties and interest later.

Not sure if your side income counts?

The line between a hobby and trading is not always obvious. TaxTune tells you in minutes whether you need to declare, registers you if so, and keeps the tax as low as the rules allow.

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Frequently asked questions

Do I have to declare side income to HMRC?

If your trading income is over £1,000, or you have other untaxed income above the allowances, you usually must register for Self Assessment and declare it. Below £1,000 the trading allowance often covers it.

What is the trading allowance?

It lets you earn up to £1,000 of trading income a year tax free without reporting it. If you cross £1,000, you can still deduct the allowance instead of expenses if that is better.

Does HMRC know about my side hustle?

Increasingly, yes. Online platforms share seller and income data with HMRC, so undeclared income is more likely to be spotted than in the past.

Do I pay tax on renting a room?

The Rent a Room scheme lets you earn a set amount tax free from letting a furnished room in your home. Above that, the income is taxable and reported through Self Assessment.

What if I have not declared past side income?

Register and declare it as soon as possible. Coming forward voluntarily usually reduces penalties compared with HMRC discovering it, and interest and penalties are lower the sooner you act.