Tax authorities have issued a stark warning to Britons earning extra cash from festive side hustles this Christmas, cautioning that failure to comply with rules could result in significant penalties.
The £1,000 Trading Allowance: What You Need to Know
HM Revenue and Customs (HMRC) is reminding anyone making money from seasonal activities like Christmas markets, online sales, or social media content creation to understand their tax obligations. UK law provides a £1,000 trading allowance per tax year, meaning you can earn up to this amount from side ventures on top of your main income without paying tax. However, earnings exceeding this threshold are subject to taxation.
Critically, this allowance applies to your combined income from all side activities. For example, if you earn £800 from selling handmade crafts and a further £400 from content creation, your total of £1,200 surpasses the allowance, making you liable for tax. HMRC emphasises that this £1,000 figure is based on income before expenses, not profit.
Key Deadlines and Registration Requirements
If your side hustle earnings exceeded £1,000 in the 2024-25 tax year (6 April 2024 to 5 April 2025), you must register for self-assessment as a sole trader. The subsequent tax return and any payment due must be completed by 31 January 2026.
Income generated from festive ventures this December will fall into the 2025-26 tax year. This means it must be declared, and any tax paid, by the end of January 2027.
HMRC's 'Help for Hustles' Campaign and Allowable Expenses
To aid understanding, HMRC has launched its 'Help for Hustles' initiative. This campaign clarifies crucial distinctions, such as the difference between selling personal belongings to declutter and selling items specifically for profit. It also offers specific guidance for content creators and provides a free, anonymous online checker for those unsure of their status.
Taxpayers may also reduce their bill through "allowable expenses" – costs wholly related to the side business. These can include stationery or other office costs. Furthermore, if you have no other income, you may not pay tax if your total annual earnings are under the £12,570 personal allowance.
HMRC's warning is clear: "As your side hustle grows, any unpaid tax might come under the spotlight. This could lead to an unexpected and possibly very large tax bill... That’s why it’s really important to stay on top of your tax affairs." The advice is to pay what you owe promptly and contact HMRC immediately if you have undeclared income from previous years.
