HM Revenue & Customs (HMRC) has issued a stark warning to households across the UK, urging those with festive side incomes to check if they have breached the tax-free trading allowance. The tax authority's 'Help for Hustles' campaign is targeting individuals who earned extra money from activities like selling handmade crafts or reselling goods over the Christmas period.
Understanding the £1,000 Trading Allowance
Every individual in the UK has a £1,000 tax-free trading allowance each tax year. This means you can earn up to this amount from casual or side work on top of your main employment without having to pay tax on it or inform HMRC. However, once your total income from all such ventures exceeds this threshold, you must declare it.
It is crucial to note that this is a single allowance. All income from different side hustles is combined. For instance, if you made £800 from freelance content creation and a further £500 from selling homemade decorations online, your total of £1,300 would surpass the allowance. In this case, you are required to notify HMRC.
Key Deadlines and Registration Requirements
For anyone whose side income exceeded £1,000 in the 2024-25 tax year (6 April 2024 to 5 April 2025), action is required. You must register for self-assessment as a sole trader. The deadline to file your tax return and pay any tax owed for that year is 31 January 2026.
Earnings from sales made this Christmas will fall into the 2025-26 tax year. The declaration and payment for this period will be due by 31 January 2027.
Your Responsibilities for Accurate Record-Keeping
HMRC emphasises that maintaining clear financial records is the individual's responsibility. "It’s your responsibility to keep full and accurate records of all sales, income and business expenses – even if you use a tax agent or accountant," the authority states. These records are essential for completing your tax return correctly and could be requested by HMRC.
This crackdown serves as a timely reminder for the growing number of people supplementing their income through online marketplaces and craft fairs. Failing to declare taxable income can result in penalties and interest charges from the tax office.
