Reported by The Guardian
Up to 1.4 million people could benefit from change to trading allowance announced in budget, with some saving hundreds in tax
The amount Britons can earn from a side hustle without paying tax will rise to £3,000 next year in a fillip for those who make extra cash from hobbies or reselling.
Up to 1.4 million people could benefit from the change announced in the budget , with the chancellor confirming the tax-free “trading” allowance will increase from £1,000 to £3,000 in April 2027.
More from the original report
The number of Britons with a side hustle has exploded in recent years, with reselling clothes, tutoring and dog-walking among the popular avenues to create extra income at a time when household finances are under pressure.
Last year, 2.6 million people made money selling goods through platforms including eBay , Vinted and Etsy, according to data provided by HM Revenue and Customs (HMRC) to accountancy firm Lubbock Fine. In 2024 the number was just 450,000.
Currently, people can earn up to £1,000 a year from a side hustle without paying tax but above this you may owe tax if your total income, including your main job, is above the £12,570 personal allowance.
Out of the 1.4 million people, an estimated 400,000 will see their tax bill go down, with an average saving of £380. Meanwhile, about 100,000 people will no longer have to report their trading income to HMRC.
Sarah Coles, the head of personal finance at AJ Bell, said that for people with a small side hustle, the more generous allowance “doesn’t just save tax, it also takes the hassle of admin off their plate”.
As a result, she added: “You can spend more time working for yourself and less doing paperwork for HMRC. It means you can make £3,000 before you have to think about doing a self-assessment tax return.”
Coles said people who were making more than £3,000 would have the choice to use the allowance or subtract business expenses and capital costs when calculating their profits for tax purposes.
Jane Hawkes, a consumer champion and the founder of the Lady Janey blog,…