Brits with a side hustle will see their tax-free allowance rise from £1,000 to £3,000
Brits with a side hustle will see their tax-free allowance on their enterprise rise from £1,000 to £3,000, the government has announced.
Around 1.4 million Brits stand to benefit from the change, announced as part of this week’s Budget measures, which will take effect in April 2027.
The government introduced the scheme to support the UK’s booming side-hustle economy, with the Small Business Institute estimating that a small percentage rise in productivity could add £320 billion to the wider economy by 2030.
“The measure is intended to provide additional income tax relief for individuals with trading or miscellaneous income and to further simplify the tax treatment of small-scale business activities,” the government has said.
“By increasing the amount of income that is covered by the allowance, the measure will reduce the number of individuals required to calculate taxable profits or submit a Self Assessment tax return to HMRC in respect of this income, thereby reducing administrative burdens.”
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Popular side hustles have included dog walking, selling clothes online, tutoring, jewellery making, and presenting content on YouTube.
The Small Business Institute has found that nearly half of UK adults now have at least one side hustle and almost seven in ten want to grow, either gradually or into a full-time business.
Their research found that almost 50% of side hustlers say more reliable income would help them make it their main livelihood: the challenge is turning early demand into a business they can depend on.
How the scheme will help Brits with a side hustle
The trading allowance enables individuals to earn small amounts of trading and miscellaneous income tax-free.
The government is increasing the allowance from April 2027 to provide further support for small-scale entrepreneurship and those starting new business activity.
At the tax update in spring 2025, the government announced that the Income Tax Self Assessment reporting threshold for trading income would be increased to £3,000.
Michelle Ovens, Chief Executive of Small Business Britain, said: “The way people start businesses has changed, but too many of the systems around entrepreneurship are still built for a world where you quit your job, invest your savings and take the leap.
“That is a huge opportunity for the UK. A side hustle can be the first step towards greater financial independence, a full-time business, new jobs and new markets, but we need to make sure our systems help people move forward rather than creating barriers just as they begin to grow.
“We should not be asking entrepreneurs to take a blind leap of faith. We should be building the confidence, skills and support that allow people to take the next step when their business is ready.”