Britons' Side Hustle Tax Allowance To Jump to £3,000 as Treasury Targets Low‑Level HMRC Red Tape

Britons' tax‑free side hustle allowance will triple to £3,000 in April 2027, allowing up to 1.4 million people to earn more from small‑scale trading without paying Income Tax on that income, the government has confirmed.

The trading allowance will rise from £1,000 to £3,000 on 6 April 2027, with the Self Assessment reporting threshold for trading income increasing to the same level. Ministers say the change, announced in the 2026 Budget, is intended to cut the number of people who must report small amounts of income to HM Revenue and Customs (HMRC).

The higher allowance and threshold are designed to apply to modest, often part‑time activities. They do not alter the basic rules on when income counts as trading income or whether tax is due overall.

Who Will Gain From the Higher Allowance

HMRC estimates that up to 1.4 million people could benefit, either through lower tax bills or reduced paperwork. About 400,000 are expected to pay an average of £380 less in tax each year, while roughly 100,000 could no longer need to report their trading income at all.

The allowance applies to qualifying trading and miscellaneous income, such as tutoring, dog walking or selling goods for profit. It is not a blanket exemption for all additional earnings. It is also separate from the personal allowance, which is £12,570 for most taxpayers.

Under current rules, people with more than £1,000 in gross trading income generally must tell HMRC, subject to exceptions. Whether they owe tax depends on their taxable profit, other income and available allowances. The existing £1,000 allowance remains in force until April 2027, when it will be replaced by the higher £3,000 limit.

Those whose income exceeds the new limit may need to calculate their taxable profit. Depending on their circumstances, they may be able to claim the allowance instead of deducting actual business expenses, and should compare the two approaches.

The higher reporting threshold does not guarantee that everyone earning £3,000 or less will avoid a tax return. People may still have to file one for other reasons.

Side Hustles, Platforms and Hmrc Data Collection

The allowance change is separate from rules introduced on 1 January 2024, under which digital platforms must collect and report certain seller information to HMRC. Platforms covered include eBay, Vinted and Etsy.

Sellers of goods are not reported if they make fewer than 30 sales and receive less than €2,000 in a calendar year. The thresholds apply to the calendar year, not the tax year.

Being reported does not mean a seller owes tax. The rules concern the sharing of information by platforms, not a new tax on selling personal belongings.

HMRC guidance distinguishes between trading and clearing out unwanted items. Selling personal possessions is generally unlikely to trigger an Income Tax liability, although Capital Gains Tax considerations can arise for certain items sold for more than £6,000. Buying goods to resell at a profit is more likely to count as trading.

What Ministers and HMRC Expect

The government says the higher allowance is intended to simplify tax administration and reduce the burden on people with small amounts of trading income.

The change does not remove the need to comply with existing tax rules. People who earn money on the side should check whether their activity counts as trading, whether the allowance applies to them and whether they must report their income to HMRC.