Side Income and Self Assessment: Do You Need to Register?

If your side income from selling, making or providing services was more than £1,000 in the 2025/26 tax year, you will usually need to register for Self Assessment by 5 October 2026 and file a return by 31 January 2027. At or below £1,000, the trading allowance generally means there is nothing to report.

Side income has become ordinary: weekend markets, online shops, tutoring, delivery shifts, craft sales. Many people with a full-time job do not realise that earning extra can mean filing a tax return. This guide explains when you need to register, how the trading allowance works, and how to get it done before the deadline.

Key takeaways

• The trading allowance covers up to £1,000 of gross trading income a year.
• Above £1,000, you normally register for Self Assessment by 5 October after the tax year.
• You can deduct the £1,000 allowance or your actual expenses, not both.
• Selling personal belongings is not usually trading.
• Online platforms report many sellers' details to HMRC.

What counts as trading income

Trading income is money you earn from selling goods or services with a view to making a profit. Making and selling candles, reselling items bought for the purpose, freelance design, dog walking and gig work usually count. Selling your own unwanted clothes or furniture usually does not. The allowance is based on gross income — what customers paid — before any costs. GOV.UK explains the rules on tax-free allowances on property and trading income. There is a separate £1,000 property allowance for small amounts of rental income, such as renting out a driveway.

Trading allowance vs actual expenses

Why it matters if you already have a job

Your employer deals with tax on your salary through PAYE, but PAYE knows nothing about your side income. Profit from the side business is added to your other income, so it is taxed at the rate that applies to the top slice of your income. If your salary already uses your Personal Allowance, every pound of side profit is taxable. That is why saving part of what you earn from the side business, as you go, is a good habit.

Step by step: registering before 5 October 2026

1. Add up your gross side income for 6 April 2025 to 5 April 2026, using bank statements and platform reports.
2. Check whether it is trading or simply selling personal belongings.
3. If it is over £1,000, register as self-employed through GOV.UK's Self Assessment registration service.
4. Wait for your Unique Taxpayer Reference, which arrives by post and can take a while.
5. Gather your costs and decide whether the allowance or actual expenses gives the better result.
6. File your return online by 31 January 2027 and pay any tax due by the same date.
7. Start separate records for 2026/27 now, ideally with a separate bank account.

Keeping simple records from day one

You do not need complicated software for a small side business, but you do need records that would satisfy HMRC if it ever asked. At minimum, keep a list of what you sold and when, what customers paid, and what you spent, with receipts or invoices to back up the costs. A separate bank account used only for the side business makes this much easier, because the statement becomes most of your record.

Download platform sales reports regularly, because they can be hard to retrieve later. If your side income grows, remember that Making Tax Digital for Income Tax looks at combined gross self-employment and property income: over £20,000 for the 2026/27 year brings you into MTD from 6 April 2028. Good habits now will make that change far easier.

Worked example (illustrative example)

"Aisha", an invented illustrative example, works full time as a receptionist and runs a small sewing business selling cushion covers online and at weekend markets. In 2025/26 her customers paid £4,200. Her fabric, thread, market pitch fees and postage came to £1,600.

Because her gross income is over £1,000, she registers for Self Assessment in September 2026. On her return she compares the two options: deducting the £1,000 trading allowance would leave a taxable profit of £3,200, while deducting her actual costs of £1,600 leaves £2,600. She claims actual expenses and keeps the receipts. Her salary uses her Personal Allowance, so the £2,600 is taxed at her marginal rate, and she pays by 31 January 2027. The person and figures are invented to show the comparison.

Common mistakes

• Testing profit instead of income against the £1,000 limit.
• Claiming the allowance and expenses together. It is one or the other.
• Assuming a job means no tax return is needed.
• Leaving registration until January, when the UTR may not arrive in time.
• Not saving for the bill, especially if payments on account then apply.

Get your side income sorted

Our personal tax service starts from £180 per year and covers registration and your Self Assessment return. Read our guide to the Self Assessment registration deadline, and once your bill reaches £1,000, see payments on account. If your side income is delivery work, our guide to courier expenses explains what you can claim.

Unsure whether you need to register before 5 October? Get in touch or see our pricing.