Side-hustle tax basics: a plain-English introduction

Know the £1,000 threshold

HMRC says you generally need to register as a sole trader if you earn more than £1,000 in a tax year from self-employment. The tax year runs from 6 April to 5 April. The threshold relates to gross trading income before expenses, not profit.

• Add income from your trading activities together
• Keep evidence of every payment received
• Check the current HMRC rules for your circumstances

Keep simple records

Track the date, customer, amount and purpose of income. Record business costs and retain receipts. A separate account is not always legally required for a sole trader, but separating transactions can make reconciliation much easier.

• Income log
• Expense log and receipt copies
• Invoices and contracts
• Mileage or home-working records where relevant

Register and meet deadlines

Registration is through Self Assessment. HMRC’s official registration journey explains when to notify them and what records to keep. Rules can change, including Making Tax Digital requirements, so re-check official guidance each tax year.