Britain to raise tax-free allowance for side hustles to £3,000 — The Guardian

In the United Kingdom, from April 2027, the tax-free allowance for income from additional commercial activity will rise from £1,000 to £3,000 per year. The change, announced in the budget, could affect up to 1.4 million people who earn extra income, including from reselling items, tutoring or dog walking.

Tax changes from 2027

It is estimated that for around 400,000 people, tax payments will decrease by an average of £380. Another approximately 100,000 people will no longer have to report income from such activities to HM Revenue & Customs (HMRC).

Currently, a person can earn up to £1,000 per year from additional activities without paying tax. If income exceeds this level, tax liabilities may arise depending on total income, including from primary employment, and the personal tax-free allowance of £12,570.

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Sales on online platforms

As The Guardian reports, 2.6 million people earned income from selling goods through eBay, Vinted and Etsy last year. In 2024, there were 450,000 such sellers, according to HMRC data provided to accountancy firm Lubbock Fine.

Sarah Coles, head of personal finance at AJ Bell, said that the higher limit would not only reduce tax but also cut the administrative burden for people with small additional earnings. At the same time, those earning more than £3,000 will be able to choose whether to apply the allowance or deduct business expenses and capital expenditure when calculating taxable profit.

The sale of personal used items is not taxed if they are sold for less than they were bought for, as there is no profit. Since last year, online platforms have been required to report to HMRC data on sellers who made at least 30 sales or received €2,000 — around £1,700 — in a year.