UK Increases Side Hustle Tax-Free Allowance to £3,000

The Government of the United Kingdom will increase the tax-free trading allowance for side hustles from £1,000 to £3,000 starting in April 2027. Announced as part of the budget, the policy change targets Britons earning supplemental income through activities such as tutoring, dog-walking, and reselling goods on digital platforms like eBay, Vinted, and Etsy.

Approximately 1.4 million people are expected to benefit from the increase. Of these, 400,000 individuals will see an average tax saving of £380, while 100,000 people will no longer be required to report their trading income to authorities. For those earning over the new £3,000 threshold, the government will allow a choice between using the flat allowance or deducting business expenses to determine taxable profits.

The decision follows a significant rise in side-hustle activity across the country. The number of people selling goods via digital platforms grew from 450,000 in 2024 to 2.6 million last year. HM Revenue & Customs will continue to manage the trading allowance and receive seller data from digital platforms to ensure compliance.