Our economy is going through an unexpected transformation with a significant portion of us now supplementing the salary from work with what has become known as a side hustle. From selling handcrafted goods online and freelancing in digital fields, to engaging in cryptoasset trading and property-related ventures, the side hustle phenomenon is pervasive.
With such a dynamic economic shift, HM Revenue and Customs (HMRC) recently issued guidance urging side hustlers to check their tax obligations for 2024–2025 tax year's to cover their self assessment liability.
Around 39% of all British adults now have some form of side hustling going on. It's not a small amount of additional income either; an average side hustle is topping up earnings by about £210 a week, that's around £900 per month. Like I said, an extra £10,000 a year is not a small amount and almost the same as the tax-free personal allowance.
For some, however, these secondary income streams are not extra cash; for many, the side hustle actually serves as a primary means of financial bracing. Approximately 28% of side hustlers depend on their secondary earnings for covering everyday living expenses.
The rapid growth is evident, with a 66% increase registered since 2022 alone and projections anticipating that nearly half of all Brits will have a side hustle by the end of 2025.
Side hustles are collectively adding an estimated £70 billion annually to the UK economy.
Side Hustle Demographics
The side hustle revolution is most pronounced among younger generations.
Data indicates that 61% of Gen Z (those aged 16–26 right now) and 55% of Millennials (aged 27–42 right now) are involved in some form of secondary income generation. This trend gradually tapers with age, with only 35% of Gen X and 17% of Baby Boomers engaging in side hustling. The technological savvy, willingness to leverage digital platforms, and the desire for financial independence are all contributory factors among younger people looking to bolster their income or pursue entrepreneurial ventures.
Gender dynamics further illustrate the disparities in the side hustle domain. Men represent a slight majority at 54%, and significantly, they on average earn 64% more from their side hustles when compared to their female counterparts. This discrepancy highlights both opportunity and challenge within the secondary economy, with participation rates relatively balanced, the income gap points toward potential differences in industry choices, investment in skills, or access to networks and resources.
Regional variations also play a crucial role in shaping the side hustle ecosystem. London emerges as the leading hub, where nearly 58% of residents showcase an engagement in side hustles, with the average monthly earning peaking at £1,331. In stark contrast, Wales records the lowest level of participation at 31%, with average monthly earnings of around £620. These differences may be attributed to the varying economic structures, cost of living, and the density of digital infrastructure between regions.
Jobs in Side Hustle Market
The range of side hustles is as diverse as the individuals who pursue them. For many, the venture begins with the sale of handcrafted goods; a category that alone accounts for approximately 23% of all side hustle activities.
However, the spectrum extends well beyond artisan merchandise.
Freelancing in various fields, such as graphic design, writing, and web development, has seen explosive growth amid technological advancements that facilitate remote work.
Photography, social media influencing, and even niche consulting are becoming increasingly common as modern entrepreneurs seek to monetise their passions and expertise.
The rise in online platforms has particularly boosted side hustles. Digital marketplaces and social media not only facilitate the sale of products and services, but also create communities where like-minded individuals exchange ideas, collaborate, and inspire innovation. These platforms have democratised the ability to reach a global audience, enabling small-scale entrepreneurs to compete with larger firms and traditional market players.
The Tax Implications of Side Hustles
HMRC’s recent guidance is a timely reminder that additional income, particularly if it exceeds the £1,000 annual trading allowance threshold, must be reported via Self Assessment.
HMRC are already getting earnings information from popular freelancer platforms.
The 'Tax Man' emphasises that early registration and filing are critical; both to avoid last minute scrambles during the January rush and to mitigate the risk of penalties.
The self assessment tax return currently due is for income during the tax year 2024–2025. In this tax return there are several new measures to help shape the reporting process. One notable development is the introduction of dedicated sections in the tax return specifically for cryptoasset transactions.
As digital assets gain prominence, it becomes increasingly important that gains or income from such sources are transparently reported. Additionally, impending Making Tax Digital (MTD) requirements will expand to encompass all individuals earning over £50,000 from April 2026 (next April!). These changes mandate the maintenance of digital records and regular quarterly submissions, representing a significant shift in administrative expectations.
Despite HMRC's efforts and initiatives to help with the new reporting requirements, surveys and studies indicate that a substantial segment of side hustlers remains unaware of their tax obligations.
Misunderstandings such as the belief that occasional sales or earnings below a certain limit are exempt continue to fuel non-compliance. Inevitably, such oversights lead to penalties, which start at £100 and increase if the tax return is not submitted promptly.
Many people are unaware that regular income generated from side hustles is taxable beyond the threshold provided by the trading allowance. In addition, the process of registration for Self Assessment and subsequent filing appears daunting to people who are working for the first time for 'themselves' (albeit in a seemingly unofficial way).
Why Should Side Hustlers File Their Tax Return Early?
By registering promptly and submitting their tax returns early, individuals can determine their tax liabilities well in advance, giving a clear picture of finances for budgeting. They get to correct any errors or omissions well in advance of the January 31st deadline and beat the rush in that period in case they need support. If any issues cause delays now it is far enough from January to not cause worry about late filing penalties or fines.
You can use our multiple income tax estimate tool to figure out what the extra tax bill would be for income outside of main PAYE employment.
You can also use our side hustle pay calculator to work out how much take home income you need from a side hustle. The calculator works in reverse so you enter your main income and then how much you want to take home from a side hustle (let's say an extra £250 a month). The calculator will tell you how much gross/turnover you need to make, with the remainder going in taxes.