Turning a hobby into a side business can be a great way to earn some extra income. But if your side hustle is bringing in money, it’s important to understand when you may need to tell HMRC and pay tax.
With wedding season underway, for example, you might be earning extra income from making wedding stationery, filming wedding videos, creating cakes or providing other services.
When do you need to tell HMRC?
If your total income from trading or providing services is more than £1,000 in a tax year, you may need to register for Self Assessment and report your income to HMRC.
The £1,000 trading allowance applies to your combined trading income. So, if you have several side hustles, you’ll generally need to add the income from each one together when considering whether you have exceeded the threshold.
It’s also important to distinguish between selling unwanted personal possessions and running a business. Simply selling items you no longer need is unlikely to mean you have taxable trading income. However, if you’re regularly buying or making goods to sell for a profit, or providing services in return for payment, this is more likely to be treated as trading income.
Not sure if your side hustle is taxable?
The rules can be confusing, particularly if you have multiple income streams or your side hustle has recently started to grow.
If you’re unsure whether you need to register for Self Assessment or declare your side hustle income, our London-based accountancy team can help.
Get in touch with us today to discuss your circumstances and make sure you’re meeting your tax obligations.
