Side Hustle / Trading Allowance Calculator

Calculate tax on side hustle income. Use the £1,000 trading allowance or claim actual expenses.

Last updated: April 2026 · Source: GOV.UK — Set up as a sole trader

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Disclaimer

This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.

How It Works

Income from a side hustle is taxable if it exceeds the £1,000 trading allowance. Below this threshold, you do not need to declare it or register for Self Assessment. Above £1,000, you must register as self-employed with HMRC, file a Self Assessment tax return and pay income tax and Class 2 and Class 4 National Insurance on your profits.

You can choose to either deduct the £1,000 trading allowance from your gross income or deduct your actual expenses instead — whichever gives a lower taxable profit. For side income with minimal expenses, the trading allowance is usually more beneficial. Separate property income allowance of £1,000 also exists for rental income.

Tax on side income is calculated at your marginal rate, which depends on your total income from all sources. If your day job already uses your basic-rate band, side hustle profits may be taxed at the higher rate of 40%. Class 4 NI is 6% on profits between £12,570 and £50,270, then 2% above that.

Example: £8,000 side income, £2,000 expenses, £35,000 day job

  1. Side income: £8,000, Expenses: £2,000
  2. Option A (trading allowance): £8,000 − £1,000 = £7,000 taxable
  3. Option B (actual expenses): £8,000 − £2,000 = £6,000 taxable
  4. Best option: B (actual expenses) — saves tax on £1,000
  5. Tax on £6,000 at 20%: £1,200 + Class 4 NI (6%): £360 = £1,560

Source: GOV.UK — Set up as a sole trader

Frequently Asked Questions

What does the Side Hustle / Trading Allowance Calculator do?
Calculate tax on side hustle income. Use the £1,000 trading allowance or claim actual expenses. All calculations are performed in your browser using official UK rates and thresholds.
Is this calculator updated for the 2025/26 tax year?
Yes. This calculator uses the latest HMRC rates and thresholds for the 2025/26 UK tax year, which runs from 6 April 2025 to 5 April 2026. Rates are verified against official HMRC publications.
Do I need to tell HMRC about this?
Whether you need to report to HMRC depends on your individual circumstances. If you are unsure, check GOV.UK or contact HMRC directly. This calculator provides estimates for guidance only.