Autumn Budget · UK side hustle tax

UK Budget 2026: what changes for your side hustle?

By Thinking Bytes · Published and checked against official sources 29 October 2026.

The UK Budget on 28 October 2026 announced a £3,000 trading allowance from 6 April 2027, up from £1,000. For people earning extra money through freelance work, tutoring or selling goods as a business, that could reduce the amount subject to Income Tax. The current 2026/27 allowance is still £1,000. Read HMRC’s announcement.

Budget 2026 side hustle tax changes at a glance

These are announced measures with different implementation timetables. The trading allowance increase is due to be legislated through Finance Bill 2026–27. Sources and implementation detail are linked in each section.

Is the trading allowance £1,000 or £3,000 after the Budget?

Use £1,000 for 2026/27, ending 5 April 2027. HMRC’s Budget policy sets the £3,000 allowance and reporting threshold from 6 April 2027, for 2027/28 onwards. It increases tax relief as well as the reporting threshold. The earlier 2025 reporting proposal and this new allowance announcement should not be confused. Check the policy’s operative date and proposed legislation.

The threshold uses gross trading income before costs. Under the existing rules, the allowance covers relevant trades together, rather than giving you a separate allowance for every platform. You normally choose the allowance or allowable expenses; you cannot deduct both. Eligibility exclusions include partnership income and certain income from employers or connected companies. HMRC explains eligibility and exceptions.

Other circumstances can still require a tax return below the threshold. If HMRC has sent a notice to file, address it rather than assuming the allowance removes the requirement.

If your costs are substantial, compare both deductions. For example, £5,000 of sales less £3,500 of allowable expenses leaves £1,500 profit. That is lower than the £2,000 left by a £3,000 allowance. A bigger allowance does not automatically make it the better choice. Compare the trading allowance with expenses.

How much tax could a side hustle save from April 2027?

This illustration holds annual gross trading income at £5,000, assumes eligibility for the allowance, no other self-employment and sufficient PAYE income to use the Personal Allowance. It isolates the allowance change; it is not a complete forecast of your future tax bill.

The calculated saving is £400 at 20% or £800 at 40%. Someone with unused Personal Allowance, higher expenses or profit crossing a tax band will get a different result. The Budget rate tables retain main earned-income rates of 20%, 40% and 45% and a £12,570 standard Personal Allowance for 2027/28. See the official rates and allowances.

Does having a full-time job change the calculation?

Your PAYE income can use up your Personal Allowance and lower tax bands before trading profit is added. A £48,000 salary plus £4,000 taxable side-hustle profit in 2026/27 crosses the £50,270 higher-rate threshold: £2,270 × 20% plus £1,730 × 40% gives £1,146 extra Income Tax, using England, Wales and Northern Ireland rates and the standard allowance. This is our worked calculation from HMRC’s published rates.

Calculate tax when employed and self-employed. Scottish taxpayers have separate earned-income bands: use the Scottish calculator and check current Scottish rates.

Will I still pay National Insurance on a side hustle?

For 2026/27, Class 4 is 6% on self-employed profit above £12,570 up to £50,270, then 2%. In the £5,000-sales illustration, trading profit is below that threshold, so Class 4 is £0. A PAYE salary does not use up the separate Class 4 profits threshold. Combined Class 1/Class 4 annual maximum adjustments are outside this calculator’s scope. Check HMRC’s self-employed National Insurance guidance.

What does the Budget mean for delivery drivers and business mileage?

The government made the 55p rate for the first 10,000 business miles in your own car or van permanent and announced 35p above 10,000 miles. The first-band rate had already risen from 45p for 2026/27. Read the 27 October ministerial statement.

HMRC’s published 2026/27 mileage tables currently show 55p/25p. Check the applicable year and implementation guidance before using the announced 35p rate. A mileage deduction reduces taxable profit; it is not a cash payment of that amount. If you use the trading allowance, do not add a mileage expense deduction on top. Check the current employee rates and self-employed simplified vehicle expenses.

Keep a business-mileage log and compare allowable costs with the allowance before entering your expense total in the delivery driver tax calculator.

Is there a new Budget tax on Vinted, eBay or Etsy sales?

The marketplace announcement concerns VAT collection. From October 2027, the government intends platforms to collect VAT on relevant sales by UK VAT-registered businesses and other UK businesses meeting a £90,000 annual sales threshold per platform. Personal sales, second-hand goods and business-to-business transactions are excluded from this extension; detailed rules will follow. Read HMRC’s marketplace VAT policy.

Separately, Income Tax depends on whether you are trading. Selling unwanted possessions is different from buying stock to resell or making items for profit. Platform reporting does not by itself make a sale taxable. Check HMRC’s online-selling guidance, then use the marketplace seller calculator for trading income. It estimates Income Tax and NI, not VAT.

Has Making Tax Digital been delayed for side hustles?

The Budget gives April 2027 joiners relief from penalty points for late submission of their first four quarterly updates in 2027/28. It also announces deferrals for several groups, rather than a blanket delay. Check your eligibility before changing plans. Budget policy decisions.

HMRC’s published timetable uses qualifying income above £30,000 in 2025/26 for an April 2027 start, and above £20,000 in 2026/27 for April 2028, subject to eligibility and exemptions. Qualifying income generally combines gross self-employment and property income. PAYE salary is excluded. Use HMRC’s eligibility checker and our MTD assessment-year guide.

Will side hustlers have to pay tax more often?

The Budget announces more regular in-year payments from April 2029 for taxpayers already making payments on account, with implementation to be developed with stakeholders. That is separate from MTD quarterly reporting. Read the payment announcement.

For now, use the existing payments-on-account rules when planning cash flow. For 2025/26, the normal online return and payment deadline is 31 January 2027; the normal paper-return deadline is 31 October 2026. HMRC lists the current deadlines. The Budget’s future allowance does not change the allowance for that return.

What about parental pay for self-employed people?

Eligible self-employed fathers, partners and adopters in Great Britain are due to get access to parental pay from April 2029. Detailed eligibility is still to be confirmed. This is future support to watch if you run your own business while planning a family. Read the ministerial announcement.

What should you do after the Budget?

1. Choose the right tax year. Keep 2025/26 filing figures separate from your 2026/27 forecast and 2027/28 plans.
2. Total your gross trading income. Combine relevant side hustles, then list allowable business expenses.
3. Compare deductions. Run the current-year calculator using eligible allowance relief, then using actual expenses.
4. Plan for payment dates. Keep a tax reserve and check whether payments on account apply.

Official sources and scope

• HM Treasury: Budget 2026, published 28 October 2026
• HMRC: increasing the trading allowance
• HMRC: Budget rates and allowances
• UK Parliament: mileage and household support statement
• HMRC: marketplace VAT extension

This guide explains the announcements as at 29 October 2026. Future measures may depend on legislation and further guidance. Worked examples are our calculations under the stated assumptions. For advice about your circumstances, contact HMRC or a qualified tax adviser. About the calculator and its methodology.