How much can I earn from a side hustle before paying tax?

In 2026/27 the first £1,000 of trading income is covered by the trading allowance and does not need to be reported. From 6 April 2027 the allowance rises to £3,000, as announced at Budget 2026, and the reporting threshold rises with it. Above the allowance, the profit is added to your other income and taxed in the band it lands in.

Can I claim expenses as well as the trading allowance?

No. You deduct either the £1,000 allowance or your actual expenses, whichever you choose. This tool deducts the larger of the two, and the ledger says which it used.

Do I pay National Insurance on a side hustle?

Class 4 is 6% on profit between £12,570 and £50,270 and 2% above, worked out on the profit alone rather than on your total income. Class 2 is treated as paid once profit is above £7,105 and is voluntary below that, so nothing is deducted for it.

What rate of tax is a side hustle taxed at?

The profit sits on top of your pay or pension. If your other income already uses the £12,570 personal allowance, every pound of profit is taxed from the first, at 20% within the basic rate band and more above it. With no other income the allowance covers the first £12,570 of profit.

When do I need to register for Self Assessment?

When trading income is over the £1,000 allowance in a tax year, by 5 October after the end of that year. From 6 April 2027 the threshold is £3,000.

Calculators

Side hustle tax calculator

Tax year 2026/27, for England and Northern Ireland, Scotland, Wales. Trading income less expenses or the trading allowance, taxed on top of your other income, this year and from 6 April 2027.

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Tax and National Insurance on your side hustle

£300a year

Kept after tax: £2,200
Income tax: £300
Class 4 National Insurance: £0

£1,500.00 of profit is taxed at 20%.

Under 2027/28 as announced so far, the same inputs give £0.00 of tax and National Insurance, £300.00 less than in 2026/27. The trading allowance moved from £1,000 to £3,000.

The working

How £2,500 of trading income is taxed in 2026/27
Line	Rate	On	A year	Source
			£2,500.00
Money received from the trade in the year, before costs: £2,500.00.
			−£1,000.00	gov.uk
The £1,000 trading allowance is more than your £200.00 of expenses, so it is deducted instead of them. Checked 7 November 2026, in force.
			£1,500.00
£2,500.00 − £1,000.00 = £1,500.00.
			£30,000.00
Pay, pensions and other taxable income: £30,000.00. It is taxed first, so it sets where the profit sits in the bands.
			£0.00	gov.uk
The standard allowance is £12,570.00. All of it is used by other income, so none is left for profit. Checked 7 November 2026, in force.
	20%	£1,500.00	−£300.00	gov.uk
Profit from £17,430.00 to £18,930.00 of taxable income: £1,500.00 × 20% = £300.00. Checked 7 November 2026, in force.
		£0.00	£0.00	gov.uk
Profit of £1,500.00 is at or below the £12,570 lower profits limit, so no Class 4 is due. Class 4 is worked out on the profit alone, not on other income. Checked 7 November 2026, in force.
			−£300.00
£300.00 + £0.00 = £300.00.

How this is calculated

Profit. Trading income less either your expenses or the £1,000 trading allowance, never both. The tool deducts whichever is larger. From 6 April 2027 the allowance is £3,000.
Personal allowance. Your other income uses the £12,570 allowance first. Whatever is left goes against the profit at 0%. Above £100,000 of total income the allowance tapers.
Income tax. The taxable profit is stacked on top of your other income and taxed band by band at the rates for where you live. Taxable amounts are rounded down to the pound.
Class 4 National Insurance. 6% on profit between £12,570 and £50,270, then 2% above, on the profit alone.

The rounding conventions are listed in the methodology, and the formulas run from the open rules file for 2026/27.

Rules used

Tax year: 2026/27 (6 April 2026 to 5 April 2027)
Nation: England and Northern Ireland
Figures: Checked on 7 November 2026. Status: in force.
Next scheduled change: 6 April 2027: New tax year. Savings and property income rates rise to 24%, 44% and 49%, the trading allowance rises to £3,000, the Pension Tax Allowance begins and the mileage rate above 10,000 miles rises to 35p.
Every figure: Rates and allowances for 2026/27, each with its source and the date it was checked.

What changes on 6 April 2027

New tax year. Savings and property income rates rise to 24%, 44% and 49%, the trading allowance rises to £3,000, the Pension Tax Allowance begins and the mileage rate above 10,000 miles rises to 35p.

The trading allowance: £1,000 to £3,000 (announced)

You can switch the tax year above to see the result under 2027/28 as announced so far.

What this does not do. It does not model a trading loss, the cash basis rules, payments on account, the annual maximum for someone who also pays employee National Insurance, Class 2 contributions, or VAT. It never suggests what to do with the result.

Questions people ask

How much can I earn from a side hustle before paying tax?: In 2026/27 the first £1,000 of trading income is covered by the trading allowance and does not need to be reported. From 6 April 2027 the allowance rises to £3,000, as announced at Budget 2026, and the reporting threshold rises with it. Above the allowance, the profit is added to your other income and taxed in the band it lands in.
Can I claim expenses as well as the trading allowance?: No. You deduct either the £1,000 allowance or your actual expenses, whichever you choose. This tool deducts the larger of the two, and the ledger says which it used.
Do I pay National Insurance on a side hustle?: Class 4 is 6% on profit between £12,570 and £50,270 and 2% above, worked out on the profit alone rather than on your total income. Class 2 is treated as paid once profit is above £7,105 and is voluntary below that, so nothing is deducted for it.
What rate of tax is a side hustle taxed at?: The profit sits on top of your pay or pension. If your other income already uses the £12,570 personal allowance, every pound of profit is taxed from the first, at 20% within the basic rate band and more above it. With no other income the allowance covers the first £12,570 of profit.
When do I need to register for Self Assessment?: When trading income is over the £1,000 allowance in a tax year, by 5 October after the end of that year. From 6 April 2027 the threshold is £3,000.

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