By Fatma Younis
The UK government will raise the tax-free trading allowance for side hustles from £1,000 to £3,000 starting in April 2027, a measure announced in the latest budget that could benefit up to 1.4 million people.
Budget announcement
Chancellor confirmed the increase, which aims to support individuals earning extra income from activities such as reselling clothes, tutoring, or dog-walking. The number of Britons with a side hustle has grown sharply, with 2.6 million people selling goods through platforms like eBay, Vinted, and Etsy last year, up from 450,000 in 2024, according to HMRC data provided to accountancy firm Lubbock Fine.
Impact on taxpayers
Currently, earnings above £1,000 from a side hustle may be taxed if total income exceeds the £12,570 personal allowance. Under the new threshold, an estimated 400,000 people will see their tax bills reduced by an average of £380, while about 100,000 will no longer need to report their trading income to HMRC.
Expert reaction
Sarah Coles, head of personal finance at AJ Bell, said the higher allowance removes administrative burden for small-scale earners, allowing them to focus on work rather than paperwork. Jane Hawkes, a consumer champion, welcomed the change but cautioned that sellers must still understand the distinction between disposing of personal items and trading for profit to avoid inadvertently breaking HMRC rules.
Platform reporting rules
Since last year, online platforms have been required to report sellers who make 30 sales or earn €2,000 (about £1,700) annually, giving HMRC greater visibility into side-hustle income.
