How to File Taxes for Side Hustles in the UK

You started your side hustle to make extra cash, explore a passion, or test a business idea—but when tax season rolls around, that excitement can quickly turn into confusion. How much do you actually owe? When do you need to file? And what if you make under £1,000? Navigating taxes for side gigs in the UK isn’t as intimidating as it sounds—once you understand the rules. In this post, we’ll break down everything from HMRC requirements to deductions you can claim, essential digital tools, and insider tips to avoid penalties. If you’ve ever wondered how to file taxes for side hustles in the UK without stress, you’re in the right place.

Understand HMRC Rules for Side Hustlers

If you’re running any kind of side income—whether it’s freelancing on weekends, selling on Etsy, or offering consultancy through LinkedIn—HM Revenue and Customs (HMRC) is paying attention. Understanding how to file taxes for side hustles in the UK starts with knowing whether your income counts and what rules apply.

Who needs to file?

If you earn money outside of regular employment, you’re likely considered self-employed by HMRC. But here’s the key: if your total side income exceeds £1,000 per tax year (April 6 to April 5 the following year), you must declare it, even if you have a full-time job elsewhere.

• Under £1,000: You’re eligible for the Trading Allowance and don’t need to report income unless claiming expenses against it.
• Over £1,000: You’re required to register for Self Assessment and file tax returns annually.

What counts as side hustle income?

Any income made outside PAYE employment counts, including:

• Freelance work (e.g., writing, web design)
• Online sales (eBay, Etsy, Amazon)
• Tutoring, coaching, or consulting
• Delivery or rideshare services (Uber, Deliveroo)
• Affiliate marketing, dropshipping, digital products

Common myths to avoid

• “It’s just pocket money.” HMRC doesn’t care if it’s a side hustle or full-time; if it’s income, it must be declared.
• “I have a job, so this doesn’t count.” All earnings outside your employer’s PAYE system are taxable.
• “I only got paid in cash, so HMRC won’t know.” Wrong. Innocent or not, undeclared income could trigger an inquiry if inconsistencies arise.

Summary: If you’re making extra money on the side, even occasionally, it’s vital to understand your obligations. Filing taxes correctly not only keeps you legal—it helps you plan and grow your side hustle professionally.

When & How to Register for Self Assessment

Once you know you’re earning more than £1,000 a year from your side hustle, the logical next step is registering for Self Assessment. This is the system HMRC uses to collect income tax from self-employed individuals. Whether you’re a content creator, part-time developer, or moonlighting UX consultant, registering properly is key to avoiding issues later down the line.

When should you register?

You must register for Self Assessment by 5 October following the end of the tax year in which you earned taxable income. For example, if you earned side income during the 2023/24 tax year (which ends on 5 April 2024), your deadline for registration is 5 October 2024.

How to register for Self Assessment

1. Visit the HMRC Self Assessment registration page.
2. Select the option “Register if you’re self-employed, or need to complete a tax return and haven’t sent one before.”
3. Complete the form with your personal details and description of your trade or service.
4. Within 10 working days (21 if abroad), you’ll receive your Unique Taxpayer Reference (UTR) by post.
5. Use your UTR to set up Government Gateway access and start managing your taxes online.

If you’ve already registered before…

If you’ve filed a tax return before (even for a different business), you don’t need to re-register. Just log in to your digital account and add the new source of income when it’s time to file.

Pro tip:

Set calendar reminders to avoid missing the Self Assessment registration deadline. Missing it could result in delays, confusion, or even fines if it affects your ability to submit on time.

Summary: Registering for Self Assessment is one of the most important steps in learning how to file taxes for side hustles in the UK. Do it promptly and correctly to stay on the right side of HMRC—and make your filing process smooth down the road.

What Income to Declare (& What to Deduct)

Doing your taxes isn’t just about reporting your income—it’s also about claiming the legitimate business expenses that reduce your taxable profit. If you want to get this right when figuring out how to file taxes for side hustles in the UK, you need to understand both sides of the ledger.

What income must you declare?

HMRC requires you to declare your gross income (before expenses) from all side hustle sources, including:

• Sales revenue from Etsy, eBay, Gumroad, etc.
• Payments from freelance clients or agencies
• Affiliate earnings or ad revenues
• Tips or bonuses—even cash-based

Important: You don’t need to include personal gifts, non-monetary trades, or income already taxed through PAYE.

What can you deduct as expenses?

HMRC allows reasonable business expenses to be deducted from income. These reduce your overall taxable profit (and therefore, your tax bill). Common allowable expenses include:

• Equipment: Laptop, mobile phone, or camera used for business
• Software: Subscriptions to apps like Canva, Adobe, Notion
• Marketing: Google Ads, Facebook campaigns, domain and website hosting
• Office costs: Printer ink, internet, home office portion of rent (use simplified or actual cost method)
• Travel: Train/bus fares, mileage if driving to clients
• Professional services: Accountant fees, legal consultation, online courses

Flat Rate (Simplified) vs Actual Expenses

If you work from home or use your car for business, HMRC allows flat rate deductions. They’re easier but may claim less than actual costs. Here’s what to consider:

• Flat Rate: Claim a set amount for hours worked at home
• Actual Expenses: Calculate and apportion detailed bills

Keep records of every invoice, receipt, and business-related cost. Use cloud storage or an app to always have a backup.

Summary: Knowing what income to declare and what expenses to deduct is essential in learning how to file taxes for side hustles in the UK. It keeps you compliant—but also allows you to keep more of what you’ve earned, legitimately and confidently.

Top Digital Tools for Hassle-Free Tax Filing

Tax season doesn’t have to be overwhelming. In fact, the right tools can automate your record-keeping, streamline submissions, and even help you estimate your tax bill in real time. For anyone learning how to file taxes for side hustles in the UK, integrating smarter software equals less stress and more clarity.

Best tools for tracking income and expenses

• QuickBooks Self-Employed: Excellent for managing side hustle finances, linking business bank accounts, and generating tax summaries.
• FreeAgent: Ideal for freelancers and micro-businesses, with robust reporting and HMRC-compatible filing options.
• Xero: Easy-to-use cloud accounting with expense categories, VAT tracking, and customizable dashboards.
• Tide or Starling Business: Banking apps with built-in expense tagging and tax estimates.

Receipt and mileage tracking

Don’t underestimate the power of a digital filing cabinet:

• Expensify: Snap receipts and automatically match them with the correct expense category.
• MileIQ or Driversnote: Automatically track your mileage for deductible business travel.

Apps for tax prep and filing

• GoSimpleTax: Enables Self Assessment submission directly to HMRC from your phone—perfect for side hustlers on the go.
• TaxScouts: Get paired with a real accountant who handles your return—ideal for first-time filers.

Systemise with spreadsheets

If you’re not ready for paid apps, start with spreadsheets. Create columns for:

• Date
• Income source
• Amount
• Expense description
• Category

Pro tip: Link your Google Sheets to forms or digital folders for one-click data logging throughout the year.

Summary: Whether you love automation or prefer the simplicity of a spreadsheet, the right tools reduce headaches when figuring out how to file taxes for side hustles in the UK. They help you stay organised, accurate, and ahead of HMRC’s deadlines.

Avoid Penalties with Pro Tips & Deadlines

The easiest way to keep your side hustle stress-free? Avoid fines and HMRC inquiries altogether. When learning how to file taxes for side hustles in the UK, understanding deadlines—and sticking to them—is just as important as reporting your income.

Key tax deadlines (UK)

• 5 October: Deadline to register for Self Assessment (if this is your first time)
• 31 October: Deadline for paper tax return submissions
• 31 January: Deadline for online tax returns and tax payment for the previous tax year
• 31 July: Second payment due if you’re making Payments on Account

Late filing penalties:

• £100 fine immediately after 31 January
• Additional daily penalties after three months
• 5% of the tax due after six months

Tips to stay on track

• Set quarterly check-ins: Review earnings, save for tax, and log expenses every 3 months
• Use a separate bank account: It helps track business transactions and keeps your records clean
• Save 20–30% of side income: Set aside this portion for income tax and National Insurance contributions
• Do a mock return early: Tools like GoSimpleTax help estimate your bill before the deadline
• Get advice: Consider hiring a bookkeeper or accountant if your side gig is growing fast or has complex expenses

Stay compliant, stay confident: Filing late or inaccurately can lead to penalties—but more importantly, it can trigger audits and unwanted stress. Staying proactive is your best defence.

Summary: Taxes shouldn’t be a mystery or a minefield. By keeping deadlines front-of-mind and setting systems in place, you’ll master how to file taxes for side hustles in the UK and feel peace of mind rather than panic when January 31 rolls around.

Conclusion

Understanding how to file taxes for side hustles in the UK isn’t just about avoiding HMRC penalties—it’s about treating your hustle like a real business, even if it’s a part-time gig. From registering for Self Assessment to claiming legitimate expenses and leveraging time-saving tools, you now have a clear roadmap to stay compliant and financially savvy.

Your side hustle has potential. But that potential grows quickest when managed with clarity and confidence. Don’t let tax confusion hold you back—equip yourself with knowledge, build smart systems, and take charge of your financial future. Every great business starts small—but every great business also understands the value of smart tax habits. Now, so do you.

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