Side hustle tax calculator: 2026/27

Side Hustle Tax Calculator 2026/27: eBay, Vinted, Etsy, Freelance Income

Q: Do I have to pay tax on a side hustle in 2026/27?

Depends on the amount. Under £1,000 gross income : covered by the Trading Allowance (Section 783A ITTOIA 2005), zero tax, no need to register or report. Above £1,000 gross income : you must register for Self Assessment (deadline 5 October after the end of the tax year in which income exceeded £1k), file a SA100 by 31 January each year, and pay any tax due. The Trading Allowance is on GROSS income, not profit - so a Vinted seller making £900 from £1,400 sales with £500 of expenses still uses the Trading Allowance because gross is £1,400... wait, that's wrong - £1,400 gross exceeds £1k, so they must register. The £1k test is on the GROSS income figure regardless of expenses. Once registered for SA, the taxpayer chooses between claiming Trading Allowance (£1,000 flat deduction) OR actual expenses each year (whichever is higher).

Calculate tax on side-hustle income in 2026/27. £1,000 Trading Allowance (under = tax-free, over = register for Self Assessment), HMRC online platform reporting rules from 2024 (eBay / Vinted / Etsy / Airbnb), worked tax bill for 5 typical side-hustle scenarios, Class 4 NI on profit over £12,570, when to incorporate, the "badges of trade" test for personal vs trading sales.

Key 2026/27 side-hustle tax rules

Under £1,000 gross

No tax

Trading Allowance covers all. No SA needed.

£1,000+ gross

Deadline 5 October next tax year. File SA100 + SA103 by 31 Jan.

Platform reporting

30+ sales / €2k

Triggers platform-to-HMRC report (since Jan 2024).

5 worked side-hustle scenarios

Scenario	Side income	Best deduction	Taxable profit	Income tax	Class 4 NI	Total tax	Effective rate
Vinted side: £800 / yr, basic-rate day job Under £1,000 - Trading Allowance covers all. Zero tax.	£800	£800	£0	£0	£0	£0	0%
eBay reseller: £3,500 income, £400 expenses Above £1k - claim TA or expenses (whichever is better).	£3,500	£1,000	£2,500	£500	£0	£500	16%
Etsy maker: £10k income, £1.2k expenses, basic-rate Real expenses (£1.2k) beat Trading Allowance.	£10,000	£1,200	£8,800	£1,760	£0	£1,760	20%
Freelance dev: £25k income, £4.5k expenses, basic→higher Some of profit pushed into higher-rate band.	£25,000	£4,500	£20,500	£5,146	£1,230	£6,376	31%
Coaching: £5k income, higher-rate day job All side profit at 40% + 2% NI.	£5,000	£1,000	£4,000	£1,600	£0	£1,600	33%

The £1,000 Trading Allowance

Section 783A ITTOIA 2005, introduced April 2017. Two ways it works:

Full relief (gross income £1,000 or under): income is automatically tax-free, no need to register for Self Assessment or report anything. Applies to gross income, not profit.
Partial relief (gross income above £1,000): you register for SA and choose £1,000 Trading Allowance OR actual expenses as your deduction. Each tax year you can switch between the two methods - whichever gives the higher deduction wins.

The Trading Allowance is separate from (and additive to) the £1,000 Property Allowance for rental income, the £500 Dividend Allowance, and the Personal Savings Allowance £1,000 / £500 / £0. A diversified side-earner can use all four simultaneously. The Trading Allowance does NOT apply to income from a partnership you control, a company you own, or business connected to your employer (anti-fragmentation rule).

Digital Platform Reporting (Jan 2024 onwards)

The Reporting Rules for Digital Platforms 2023 (SI 2023/817, implementing OECD Model Reporting Rules) require online platforms to report seller / earner income to HMRC annually. Platforms covered include eBay, Vinted, Etsy, Depop, Airbnb, Uber, Deliveroo, Fiverr, Upwork, Just Eat, Bolt, Amazon Flex.

Reporting threshold per platform per calendar year: 30 or more transactions, OR €2,000 (~£1,700) in earnings. Below both thresholds = not reported. Above either = the platform sends HMRC: your name, address, NI number / UTR / Date of Birth, total amount paid to you, total fees charged. HMRC matches this to Self Assessment returns. Common myth: the rules introduce a "new tax" or lower the £1k threshold. WRONG. The £1k Trading Allowance is unchanged. Only HMRC's visibility into platform income improved. If you've been honest about side-hustle income on SA, nothing changes for you.

"Badges of trade" - am I trading or selling personal items?

HMRC uses the badges-of-trade test (BIM20205) to distinguish trading (taxable) from personal-asset disposal (generally not taxable). Nine factors:

Profit motive (buying with intention to resell at a profit)
Number and frequency of transactions (one-off vs systematic)
Length of ownership (quick turnaround suggests trade)
Supplementary work (repairing, restoring, customising before sale)
Reason for sale (commercial vs necessity / forced)
Modifications made to enhance value
How acquired (bought to sell vs inherited / gifted)
Method of financing (borrowed money suggests trade)
Whether the activity is your normal trade or related to it

Pure personal items - selling your own clothes / books / furniture on Vinted, eBay, Gumtree - are NOT trading. Buying-to-resell, online arbitrage, Etsy maker, Depop reseller IS trading. Casual sale of own creations (handmade jewellery, art) - depends on volume and intent.

Frequently asked questions

Do I have to pay tax on a side hustle in 2026/27?

Depends on the amount. Under £1,000 gross income: covered by the Trading Allowance (Section 783A ITTOIA 2005), zero tax, no need to register or report. Above £1,000 gross income: you must register for Self Assessment (deadline 5 October after the end of the tax year in which income exceeded £1k), file a SA100 by 31 January each year, and pay any tax due. The Trading Allowance is on GROSS income, not profit - so a Vinted seller making £900 from £1,400 sales with £500 of expenses still uses the Trading Allowance because gross is £1,400... wait, that's wrong - £1,400 gross exceeds £1k, so they must register. The £1k test is on the GROSS income figure regardless of expenses. Once registered for SA, the taxpayer chooses between claiming Trading Allowance (£1,000 flat deduction) OR actual expenses each year (whichever is higher).

What is the £1,000 Trading Allowance and when can I use it?

The £1,000 Trading Allowance (Section 783A ITTOIA 2005, introduced April 2017) is a flat-rate deduction against trading income. Two ways it works: Below £1k gross income - the income is automatically tax-free, no need to register or report on Self Assessment. This is "full relief". Above £1k gross income - you register for SA, then choose between £1,000 Trading Allowance OR actual expenses as your deduction. "Partial relief". A separate £1,000 Property Allowance exists for rental income (same rules, applies independently). You cannot claim Trading Allowance AND actual expenses combined - it's one or the other each tax year. The Trading Allowance does NOT apply to income from a partnership, a company you control, or your employer's connected business.

When do I have to register for Self Assessment?

Register by 5 October following the end of the tax year in which you exceeded the threshold. Side-hustle gross income over £1,000 = register for SA. Other triggers: rental income £2,500+ gross, untaxed income from savings / investments £10,000+, partnership income, foreign income £2,000+, capital gains over £6,000 (or any year you sell residential property at a gain), Child Benefit clawback (HICBC) if either partner earns £60,000+, plus a few others. Register at gov.uk/register-for-self-assessment. HMRC will issue a Unique Tax Reference (UTR) within 10 working days, and you can then file SA100. First-time penalty for missing the 5 October deadline: £100 fixed, can rise to £1,600+ if missed for 12+ months. The £1k threshold has been static since 2017 (no inflation adjustment), so more side-hustles cross it each year.

What is the HMRC digital platform reporting rule?

The Digital Platform Reporting rules took effect 1 January 2024 (Reporting Rules for Digital Platforms 2023, SI 2023/817 - implementing OECD Model Reporting Rules). Online platforms - eBay, Vinted, Etsy, Depop, Airbnb, Uber, Deliveroo, Fiverr, Upwork, Just Eat - must report seller / earner income to HMRC annually. The first reporting period was Jan-Dec 2024, with platform-to-HMRC reporting by 31 January 2025. The rules apply if you've made 30+ transactions OR earned €2,000 (~£1,700) in a calendar year on that platform. So a casual seller making 25 sales totalling £1,500 in 2024 is BELOW the threshold and won't be reported. A seller making 35 sales of any total value WILL be reported. HMRC uses this data to cross-check Self Assessment returns. Common myth: the rules introduce a "new tax" or lower the £1k threshold. WRONG - the £1k Trading Allowance is unchanged; only HMRC's visibility has improved. If you've been honest about your side hustle income on SA, the new reporting changes nothing for you.

Am I "trading" or just selling personal items?

HMRC uses the "badges of trade" test (BIM20205) to distinguish trading from personal-asset disposal. Nine factors weighed together: (1) profit motive, (2) frequency / number of transactions, (3) length of ownership, (4) supplementary work (repair, alteration), (5) reason for sale (necessity vs commercial), (6) modifications for profit, (7) financing (borrowed to buy), (8) source of asset (inherited vs bought to sell), (9) whether buying / selling is your normal way of producing income. Pure personal items: selling your own clothes / books / furniture on Vinted, eBay, Gumtree is NOT trading - you're disposing of personal possessions. Income from this is not taxable (and "chattel exemption" Section 262 TCGA usually applies to CGT for items under £6,000 each). Buying to resell: classic eBay reseller / Vinted reseller / Etsy maker / online arbitrage IS trading. Casual sale of own creations: depends on volume and intent. A single hand-knitted scarf sold to a colleague isn't trading; 50 hand-knitted scarves sold across Etsy IS trading.

How is side hustle income stacked with my day job for tax?

Income tax stacks day-job + side-hustle profit on top of each other, with Personal Allowance applied to the day job first (it's PAYE so HMRC processes it first). Example: day-job salary £45,000, side-hustle profit £8,000 after Trading Allowance / expenses. Day job uses entire £12,570 PA, basic-rate band fills up to £50,270. £45k salary uses £32,430 of basic-rate band, leaving £5,270 headroom. £5,270 of side-hustle is at 20% basic rate = £1,054. £2,730 of side-hustle is at 40% higher rate = £1,092. Income tax on side-hustle: £2,146. Then Class 4 NI on the £8,000 profit: £8,000 × 6% = £480 (since profit under £50,270 threshold). Class 2 NI is no longer mandatory if profit under £7,105 SPT. Total side-hustle tax: £2,626. Effective rate on £8k profit: 32.8%.

Do I pay National Insurance on side hustle income?

Class 4 NI: 6% on profits between £12,570 and £50,270, 2% above £50,270 (2026/27 rates, unchanged from 2025/26). Applies only if your side-hustle PROFIT (after expenses or Trading Allowance) exceeds £12,570. Class 2 NI: £3.65/week for 2026/27, but voluntary if profit is under £7,105 Small Profits Threshold; you only pay if you want to maintain a State Pension qualifying year (£189.80/year for full qualification). NI on side hustle is in ADDITION to NI paid via PAYE on your day job - the day-job £50,270 Upper Earnings Limit and side-hustle £50,270 Upper Profits Limit are SEPARATE limits, not combined. So a higher-rate day-job earner doing a side hustle still pays 6% Class 4 on the first £37,700 of profit, not 2%. This is the structural reason side-hustlers often shift into a Limited Company structure once profit exceeds ~£30k - dividends carry no NI.

What expenses can I deduct from my side hustle?

Wholly-and-exclusively-for-business rule (Section 34 ITTOIA 2005). Common deductible: cost of goods sold (stock you bought to resell), platform fees (eBay 12.8%, Vinted 5% + £0.70, Etsy 6.5%), shipping costs, packaging, payment processor fees (PayPal, Stripe), advertising, professional fees (accountant, software subscriptions for the trade), use-of-home allowance (£26-104/month "simplified expense" or apportioned actual costs), business mileage (£0.45/mile for first 10,000 miles), phone / internet apportioned for business use, training related to the trade. NOT deductible: clothes you also wear personally (unless protective / uniform), meals while working (unless overnight stay), travel between home and a regular workplace, fines and penalties, entertainment of clients. The Trading Allowance £1,000 is an ALTERNATIVE to claiming expenses - you can't claim both. Each tax year you choose whichever gives the higher deduction. For most under-£3k side hustles, the Trading Allowance wins; above £3k, actual expenses usually win.

Should I incorporate my side hustle into a Limited Company?

Generally not below ~£20-30k profit. Costs of incorporation: company formation £12-50, annual accountant £600-1,500, Confirmation Statement £34, separate company bank account, more complex tax (Corporation Tax + dividend tax + payroll for director). Benefits only kick in when profit is high enough that the salary + dividend split out-saves the costs. Crossover point varies by personal circumstances but typically £30k+ profit makes it worth considering. Below that, sole-trader self-assessment is simpler and cheaper. Other reasons to incorporate: limited liability protection if your trade has real risk (e.g. consultancy with professional indemnity exposure), pension contribution maximisation via employer route, reputation / customer perception (some B2B clients only buy from Ltd companies). See our Sole Trader vs Limited Company guide for the full crossover analysis and optimum director salary 2026/27 for the split mechanics once incorporated.

What if my side hustle is a loss?

Side-hustle losses can be offset against other income in the same tax year (Section 64 ITA 2007 - "sideways relief"), reducing tax on your day-job salary. Worked example: day-job £35,000 salary, side-hustle £-2,000 loss (£4,000 income - £6,000 expenses). Net taxable income = £35,000 - £2,000 = £33,000. Tax saving at 20% basic rate = £400. Restrictions: (1) "hobby trade" rule - HMRC may deny relief if it's not a "trade" carried on commercially with reasonable expectation of profit (Section 66 ITA 2007). After 5 consecutive years of losses, HMRC presumes hobby unless rebutted. (2) "Sideways loss restriction" - non-active partners (sleeping investors) capped at £25,000/year sideways relief. (3) Class 4 NI losses can be carried forward but not back. Carry-forward indefinitely against future profits from the same trade (Section 83 ITA 2007). Record all losses on SA103 self-employment supplementary page even if profit is zero - this preserves the loss for future use.

How do I value items I buy and sell on eBay / Vinted?

Cost of goods sold (COGS) is your acquisition cost for items you bought to resell. Keep receipts. For each sale on Self Assessment SA103 you report: sale price minus platform fee minus original cost minus shipping. The COGS for items you already owned and decided to resell IS deductible at the time of sale (not at acquisition) - but you need a reasonable basis for the original cost. For items inherited or gifted at zero personal cost (e.g. clothes given to you, then resold), the deductible basis is £0, so the full sale price is profit. Maintain a simple spreadsheet: date, item, acquisition cost, sale platform, sale date, sale price, platform fee, shipping cost, profit. This is "good enough" record-keeping for HMRC for side hustles under £85k turnover (above £85k VAT registration becomes mandatory and accounting requirements jump). For items selling for substantially more than acquisition cost (rare vintage, collectibles), HMRC may argue you're a "trader" rather than a personal-asset disposer - which makes the gain taxable as income, not exempt under chattel rules.

When do I have to pay the side-hustle tax bill?

Self Assessment deadlines for 2026/27 (tax year 6 April 2026 - 5 April 2027). Online return deadline: 31 January 2028. Paper return: 31 October 2027 (rarely used). Payment of balancing tax: 31 January 2028. Payments on Account kick in if your tax bill exceeds £1,000 AND less than 80% is already paid via PAYE. First Payment on Account: 31 January 2028 (50% of last year's bill, advance for 2027/28). Second Payment on Account: 31 July 2028 (50% of last year's bill). Balancing Payment: 31 January 2029 (true-up). So a first-year side-hustler crossing £1k threshold gets a BIG bill on 31 January in year 2 - the full 2026/27 bill PLUS the first POA for 2027/28 (effectively 1.5 years of tax in one payment). Set aside ~30% of side-hustle profit in a savings account from day one. Reduce POA if you can demonstrate next year's income will be lower - HMRC SA303 form, but only if you genuinely expect lower profit (false claims trigger penalty).

Side hustle tax guide - broader narrative on the Trading Allowance and registration.
Trading Allowance optimiser - interactive £1k allowance vs actual expenses calculator.
Self-employed tax calculator - full SA tax + Class 2 / Class 4 NI calculation.
Sole Trader vs Limited Company - when to incorporate the side hustle.
Optimum director salary 2026/27 - if you incorporate, optimal salary + dividend split.
MTD for Income Tax guide - April 2026 mandation, quarterly digital reporting for self-employed earning over £50k.
Digital nomad UK tax - SRT residence test for remote side-hustlers abroad.
UK crypto tax guide - if your side hustle includes crypto staking / mining.