• However, side hustles are popular among Brits, with more than 2 in 5 (43%) earning money from one in 2024.
• 2 in 3 members of generation Z (67%) are unaware of side hustle tax rules but they are the most likely to have one.

10 December, 2024, LONDON –

Side hustles are a popular way to earn extra money, but new research from personal finance comparison site finder.com reveals that more than half of Brits (53%) incorrectly guessed the amount you can earn from a side gig such as selling goods online or babysitting before you need to fill in a self-assessment tax return.

The trading allowance* is £1,000 a year, but 1 in 5 Brits (22%) believe you can earn more than £4,000 a year, while almost 1 in 10 Brits (9%) believe you can earn more than £10,000 without reporting the income to HMRC.

Despite this lack of knowledge about the trading allowance, more than 2 in 5 Brits (43%) reported having a side hustle as an additional source of income in 2024. The average side hustle income among those with one is estimated to be £900 a month – or £10,800 a year.

If you were on the average annual UK salary of £37,430 but also had a side hustle earning £10,800 a year, you could be liable to pay up to an estimated £1,960 of additional income tax on top of your employment income tax.

Gen Z are most likely to have a side hustle and least likely to know the rules

Around 7 in 10 members of generation Z (aged 18-27) reported making money from a side hustle. However, the new research from Finder reveals that this generation is the least likely to understand the tax rules surrounding side hustles, with only a third (33%) correctly identifying the trading allowance compared to a UK average of 47%.

Millennials (aged 28-43) are the second least likely to be aware of the tax threshold, with only 2 in 5 (40%) correctly identifying the trading allowance. This is despite the fact that 63% of millennials reported earning money from a side hustle in 2024.

Work out your tax with a side hustle calculator

Finder has created a side hustle tax calculator to make it easy to quickly estimate how much tax you could be asked to pay on your earnings. This aims to give Brits a clearer picture of their finances and ensure they are reporting self-employment income to HMRC if they need to.

You can use the calculator here: https://www.finder.com/uk/business-banking/side-hustle-tax-calculator.

Louise Bastock, money expert at finder.com, said:

“Online marketplaces (such as eBay, Etsy and Vinted) are now required to report users’ earnings to HMRC, so it’s more important than ever for people with side hustles to be aware of when they need to file a tax return.

“There’s clearly a lack of awareness in this area despite more than 2 in 5 Brits taking up a side hustle. I’d encourage anyone doing this to check their potential tax liability using a side hustle tax calculator.

“If you’re serious about your side hustle, consider keeping the finances from this separate from your personal finances so you don’t run into any confusion. A dedicated business bank account or freelancer account can help you do just that, and some also offer cashback and savings interest to help boost your side hustle income. For example, with a Revolut Pro Account, you can earn up to 1.2% cashback on card spend and receive a £20 sign-up bonus.”

Further information

* The trading allowance is £1,000 a year for self-employment (selling goods/services) and casual services such as babysitting or gardening. This also applies to property income. Under the trading allowance rules, you don’t need to pay tax on the first £1,000. Anything above that should be reported to HMRC.

It is also possible to deduct allowable expenses from your side hustle – essential business costs that aren’t taxable – but if these are more than £1,000, you won’t be able to claim the trading allowance.

Methodology:

Finder commissioned Censuswide to carry out a nationally representative survey of adults aged 18+ between 23.08.2024 – 27.08.2024. A total of 2,001 people were questioned throughout Great Britain, with representative quotas for gender, age and region.

The average side hustle income and statistics on the number of people with a side hustle are from a previous Finder survey. Finder commissioned Censuswide in January 2024 to carry out a nationally representative survey of adults aged 18+. A total of 2,006 people were questioned throughout Great Britain, with representative quotas for gender, age and region.

The average UK salary used is based on ONS data from April 2024.