Selling on Etsy, coaching on weekends, a bit of freelance on the side — at what point does HMRC enter the chat? The answer has a precise number: £1,000.

The trading allowance

Gross trading income of £1,000 or less in a tax year: completely tax-free, no registration, no return — the trading allowance covers it. Cross £1,000 gross (income, not profit) and you generally need to register for Self Assessment, then choose the better of two options each year: deduct the flat £1,000 allowance, or deduct your actual expenses. Low-cost side hustles (digital services, coaching) usually win with the allowance; anything with real costs (materials, stock, postage) usually wins with actuals. You can't do both.

The platforms are already reporting you

Since 2024, digital platforms — eBay, Etsy, Vinted, Airbnb, Uber, Deliveroo, freelance marketplaces — report sellers' income to HMRC automatically (broadly, once you pass 30 sales or ~€2,000 in a year). HMRC has been matching those reports against tax records and writing to people ever since. The letters are polite. The message isn't optional: undeclared side income is now visible by default.

One nuance: selling your own second-hand belongings isn't trading — clearing the loft on Vinted isn't taxable. Buying to resell, making to sell, or providing services is trading. The grey zone (occasional flips?) is judged on the "badges of trade" — frequency, intent, organisation.

When registering is actually good news

  • Losses: a genuine side business that loses money early can (with actual-expense accounting) offset losses against other income — worth real tax back for PAYE earners building something.
  • Growth ambitions: registered-and-tidy from the start beats retrofitting three years of records the day a hobby becomes a career — see our going self-employed guide.
  • Mortgage applications: declared income is usable income.

The 60-second self-check

  1. Gross side income under £1,000? Relax — nothing to do.
  2. Over £1,000? Register for Self Assessment (by 5 October after the tax year ends) and pick allowance vs actuals with a calculator, not a guess.
  3. Heading past £2–3k and climbing? Get the habits in early: separate account, receipts captured, a tax pot. It's the same playbook as full self-employment, in miniature — and our Solo package covers it from £19 + VAT a month.