Self-Employment Tax UK 2026/27 — Income Tax, National Insurance, Expenses and IR35Side Hustle Tax Calculator UK 2026 — Self-Employment & Gig Economy
Calculate tax on your side hustle income. Trading allowance, when to register, how much you'll pay, and how to stay legal.
More people than ever have side hustles. Here’s how the tax works and what you need to do to stay on the right side of HMRC.
The Trading Allowance
Your Tax-Free Buffer
| Rule | Detail |
|---|
| Trading Allowance | £1,000 |
| What it covers | All self-employment income |
| No registration needed | If under £1,000 |
| No expenses claimed | Can’t use both |
How to Use It
| Gross Income | Option 1: Trading Allowance | Option 2: Actual Expenses |
|---|
| £800 | £0 tax (under allowance) | N/A |
| £1,500 | Profit = £500 (£1,500 - £1,000) | Profit = £1,500 - expenses |
| £5,000 | Profit = £4,000 | Profit = £5,000 - expenses |
Choose whichever gives lower taxable profit.
Example: Should I Use Trading Allowance?
| Scenario | Gross Income | Actual Expenses | Trading Allowance Better? |
|---|
| Freelance writing | £3,000 | £200 | No (use expenses) |
| Selling crafts | £2,500 | £1,800 | No (use expenses) |
| Tutoring (no costs) | £4,000 | £50 | Yes (saves £950) |
| Deliveroo (fuel costs) | £6,000 | £2,500 | No (use expenses) |
Tax Calculator
Understanding Your Tax Position
Your side hustle profit is added to your employment income, then taxed at your marginal rate.
Tax Rates 2026/27
| Total Income | Tax Rate | NI Rate (Class 4) |
|---|
| £0-12,570 | 0% | 0% |
| £12,571-50,270 | 20% | 6% |
| £50,271-125,140 | 40% | 2% |
| £125,140+ | 45% | 2% |
Side Hustle Tax Examples
Example 1: £30,000 Salary + £5,000 Side Hustle (£1,500 expenses)
| Calculation | Amount |
|---|
| Employment income | £30,000 |
| Side hustle gross | £5,000 |
| Less expenses | -£1,500 |
| Side hustle profit | £3,500 |
| Total taxable income | £33,500 |
| Already used Personal Allowance | In PAYE |
| Tax on side hustle (20%) | £700 |
| Class 4 NI on profit (6%) | £210 |
| Class 2 NI | £179 |
| Total side hustle tax | £1,089 |
| Side hustle net | £2,411 |
Example 2: £50,000 Salary + £10,000 Side Hustle (£2,000 expenses)
| Calculation | Amount |
|---|
| Employment income | £50,000 |
| Side hustle profit | £8,000 |
| Amount at 20% | £270 |
| Amount at 40% | £7,730 |
| Tax (20% + 40% weighted) | £3,146 |
| Class 4 NI (6%, then 2%) | £494 |
| Class 2 NI | £179 |
| Total side hustle tax | £3,819 |
| Side hustle net | £4,181 |
Quick Calculation Table
| Day Job Salary | Side Hustle Profit | Tax + NI | You Keep |
|---|
| £25,000 | £2,000 | £520 | £1,480 |
| £25,000 | £5,000 | £1,479 | £3,521 |
| £30,000 | £2,000 | £520 | £1,480 |
| £30,000 | £5,000 | £1,479 | £3,521 |
| £40,000 | £5,000 | £1,479 | £3,521 |
| £50,000 | £5,000 | £1,979 | £3,021 |
| £60,000 | £5,000 | £2,279 | £2,721 |
Registration Requirements
When to Register
| Situation | Action | Deadline |
|---|
| Income under £1,000 | No registration needed | - |
| Income over £1,000 | Register for Self Assessment | Oct 5 following tax year |
| First Self Assessment | File return | Jan 31 following tax year |
How to Register
| Step | Action |
|---|
| 1 | Go to gov.uk/register-for-self-assessment |
| 2 | Choose “self-employed” |
| 3 | Provide NI number and details |
| 4 | Receive UTR (Unique Taxpayer Reference) |
| 5 | Activate Government Gateway account |
Timeline Example
| Event | Date |
|---|
| Start side hustle | July 2025 |
| Tax year ends | April 5, 2026 |
| Register by | October 5, 2026 |
| File return by | January 31, 2027 |
| Pay tax by | January 31, 2027 |
Allowable Expenses
What You Can Claim
| Expense | Example |
|---|
| Equipment | Laptop, tools, camera |
| Materials/stock | Products you sell |
| Travel | Business miles (45p/mile first 10k) |
| Phone/internet | Business proportion |
| Marketing | Website, advertising |
| Software | Subscriptions for business |
| Professional fees | Accountant |
| Insurance | Public liability |
| Home office | Simplified £6/week or proportional |
What You Can’t Claim
| Not Allowable | Why |
|---|
| Personal expenses | Not for business |
| Fines/penalties | Not deductible |
| Client entertaining | UK rule |
| Initial clothing | Unless uniform |
| Commuting | Travel to regular workplace |
Simplified Expenses
| Option | Amount |
|---|
| Working from home | £6/week flat rate |
| Vehicle | 45p/mile (first 10,000), 25p after |
| Living in business premises | Based on occupants |
Gig Economy Specifics
| Platform | Are You Self-Employed? | Platform Reports to HMRC? |
|---|
| Deliveroo | Yes | Yes (from 2024) |
| Uber | Yes | Yes |
| Etsy | Yes | Possibly |
| eBay | Yes (if trading) | If over £1,000 |
| Amazon FBA | Yes | Yes |
| TaskRabbit | Yes | Possibly |
| Airbnb | Yes (rental income) | Yes |
From 2024, digital platforms must report sellers’ income to HMRC if earnings exceed £1,000 or you have 30+ transactions.
| Platforms Reporting | What They Report |
|---|
| Marketplaces | Your sales, name, address |
| Rental platforms | Your rental income |
| Delivery apps | Your earnings |
HMRC will know your side hustle income — don’t ignore tax obligations.
National Insurance
Classes of NI
| Class | Who Pays | Rate |
|---|
| Class 2 | Self-employed over £6,725 profit | £3.45/week (£179/year) |
| Class 4 | Self-employed over £12,570 profit | 6% (then 2% over £50,270) |
NI Calculation Example
| Profit | Class 2 | Class 4 | Total NI |
|---|
| £5,000 | £0 (exempt) | £0 | £0 |
| £10,000 | £179 | £0 | £179 |
| £20,000 | £179 | £446 | £625 |
| £30,000 | £179 | £1,046 | £1,225 |
Record Keeping
What to Keep
| Record | How Long |
|---|
| Income records | 5 years |
| Expense receipts | 5 years |
| Bank statements | 5 years |
| Invoices | 5 years |
| Mileage log | 5 years |
Simple Tracking Methods
| Method | Pros | Cons |
|---|
| Spreadsheet | Free, flexible | Manual work |
| Accounting app (FreeAgent, Xero) | Automated, reports | Monthly cost |
| Contractor apps (QuickBooks SE) | Mobile-friendly | Cost |
| Paper records | Simple | Hard to analyse |
Common Side Hustles
Tax Treatment Summary
| Side Hustle | Typical Expenses | Key Considerations |
|---|
| Freelance writing/design | Software, equipment | Home office |
| Tutoring | Materials, travel | Often few expenses |
| Delivery driving | Fuel, phone, bags | Mileage important |
| Selling crafts | Materials, postage | Stock costs |
| Renting spare room | Cleaning, utilities | £7,500 Rent-a-Room relief |
| Car rental (Turo) | Insurance, cleaning | Separate from driving |
| Social media | Equipment, software | Home office |
Rent-a-Room Relief
| If Renting Spare Room | Rule |
|---|
| First £7,500 | Tax-free |
| Above £7,500 | Taxed on profit |
| Separate from Trading Allowance | Can have both |
Penalties for Non-Compliance
What Happens If You Don’t Register
| Failure | Penalty |
|---|
| Late registration | £100 + interest |
| Late filing | £100 (immediate) + £10/day after 3 months |
| Late payment | Interest + surcharges |
| Deliberately wrong | Up to 100% of tax owed |
| Tax investigation | Stress, time, potential prosecution |
Key Takeaways
- £1,000 Trading Allowance — tax-free if under this
- Register if over £1,000 — by October 5 after tax year
- Keep records — 5 years minimum
- Track expenses — can significantly reduce tax
- HMRC sees platform data — they’ll know your income
- Plan for tax — set aside 25-35% of profit
For related content, see our self-employment tax guide, dividend vs salary calculator, and take-home pay calculator.