2025 Guide on Whether to Pay Tax on My Side Hustle

Do you have a side hustle or additional income in 2025? Whether it's selling something on Etsy or freelancing, tutoring, or running an online store, chances are HMRC will expect you to declare and pay tax on that income. Here's what you should know-most importantly, how to calculate your salary and tax if you're juggling different income streams.

1. The £1,000 Trading Allowance

You don't declare or pay tax if your total ancillary earnings are below £1,000 for a particular tax year. This is called the trading allowance and it extends to casual or low-level earnings.

2. You Must Register If You Earn More Than £1,000

If your profits from self-employment exceed £1,000, you must:

• Register for Self Assessment
• Keep records of your incomes and expenses
• Submit an annual tax return

Once registered, you will need to have calculated all jobs' salary, including freelance or side-hustle payments, so HMRC can assess all taxes due. You will pay income tax and Class 2 & 4 National Insurance based on your profits.

3. Deductible Expenses

Yes! Deduct "allowable expenses" like:

• Your website hosting or selling platform fee
• Advertising and promotion costs
• Travel, tools, and equipment
• Subscriptions directly related to your work

Thus reducing your taxable profit-the tax is levied only on that money you actually earn after the deductibles. It is thus helpful that you keep very detailed records so as to help out in ascertaining your real take-home salary.

4. What about Selling Second Hand Stuff?

It does not usually attract tax when you occasionally sell second-hand things. For example-clearance of your wardrobe or selling an old phone-usually as long as:

• You are not buying things, with a view to reselling them at a profit
• You do not have a business (such as regular listings or branding)

But hauling items every so frequently, or marketing it as a reselling side gig, may be considered by HMRC as trading-even if income hasn't been reached, you will have to be aware of how to figure out your income.

5. Real Life Examples of Side Hustle Tax

Tom works with a company by paying a salary of £35,000, but in addition, he also makes £6,000 per year through designing logos using the site Fiverr.

Therefore, he does:

• Register for Self Assessment
• Keeps a record of outlays like software and advertising with all platform fees to a total of £1,500
• Thus the taxable side hustle profit is £4,500
• This will be added to his income total salary £39,500
• He then runs it through a UK salary calculator to work out how this will affect his monthly take home

Tom's side hustle income will start inching him toward the higher tax band, but by the claiming of expenses, he will keep closer to what he earns.

6. How Much Tax Will You Pay?

You will pay taxes on total income arising from either your principal job or side jobs. Here is how it works:

1. Take a count of all income sources
2. Subtract any allowable expenses
3. Use a calculator like a salary calculator to ascertain your total tax liability and net income

Whether it is freelance work or selling things on eBay on the weekend, this is the fastest way to get an accurate depiction of your salary in 2025.

FAQs

How do I calculate tax on side-hustle income?

First, calculate your money. Then deduct any of your allowable expenses. What is left is profit--and that is what HMRC tax. You can assess how this impacts your total tax bill using a UK salary calculator.

Should National Insurance be paid on income from a side hustle?

Yes—you will pay Class 2 and possibly Class 4 National Insurance on self-employment earnings if your profit goes above the small profits threshold, which, at present, is £6,725.

Can I be employed full-time and have a side income?

Definitely. However, HMRC is going to aggregate your income from all sources and assess tax liability and NI owed therefrom. Apply a calculator to slowly assess the overall picture of your annual pay and deductions.

Conclusions

The UK is toughening up the rules to catch anyone failing to declare side income. If you're doing anything on the side to make money in 2025, keep your activities above board. Keep all records of costs incurred, register if necessary, and always calculate your salary, including your side income, to avoid nasty surprises come tax time.