What Happens If You Don’t Declare Side Hustle Income to HMRC?
- Rebecca Marshall
- Sep 5
- 4 min read
The Big Question Side Hustlers Ask
You’ve started making money on the side. Maybe it’s selling clothes on Vinted, freelancing after hours, or flipping furniture at the weekend. Then comes the thought: “Do I really need to tell HMRC about this?”
It’s a fair question. After all, it’s not like you’re running a big company, it’s just extra income, right?
Here’s the truth: HMRC does expect you to declare it if you pass certain thresholds. And if you don’t, the consequences range from mild to painful.
But here’s the part most people don’t realise: declaring doesn’t always mean paying extra tax. Sometimes it’s simply about being transparent.
Let’s break down exactly what happens, the scenarios where you do owe tax, and how to fix things if you’ve already kept quiet.
Do You Have to Declare Side Hustle Income?
In short: yes, if your turnover (that’s total sales before expenses) is more than £1,000 in a tax year.
👉 Example 1:
You sell a few items of clothing online, total sales = £750.
You’re under the trading allowance. You don’t need to declare it, and no tax is due.
👉 Example 2:
You sell handmade jewellery, turnover = £1,500, materials cost you £600 (profit = £900).
Even though your profit is under £1,000, you must declare because turnover went over £1,000.
But does declaring mean you’ll get a tax bill? Not automatically. HMRC just wants to know the numbers. Whether you pay tax depends on your total income (PAYE salary + side hustle profit), and what tax band that pushes you into.
If your side hustle profit is small, and your overall income stays within allowances, your tax bill might still be zero. The key is: declare first, then see the outcome.
Why HMRC Cares (Even About Small Stuff)
HMRC doesn’t mind how you make money; they just want to make sure tax is applied fairly. Whether it’s a full-time business or a Saturday stall, income is income.
And here’s what’s changed: HMRC is now much better at spotting undeclared side hustles. They get data from online marketplaces like Etsy, eBay, Vinted, payment platforms like PayPal and Stripe and from Banks and building societies. The old assumption that “a few cash-in-hand jobs won’t matter” isn’t as safe as it once was.
What Happens If You Don’t Tell HMRC?
If you skip declaring when you should, HMRC can add interest on any unpaid tax, charge late filing and late payment penalties and even increase penalties if they believe you deliberately avoided declaring.
But do they always hammer you?
Not necessarily. If it’s your first time and you genuinely didn’t realise, HMRC is often more lenient, especially if you come forward yourself. Most small side hustlers who declare late just end up paying the tax owed plus a bit of interest.
Where things get ugly is when income is deliberately hidden or ignored for years. That’s when penalties can double the original tax bill.
Penalties: The Reality
HMRC looks at intent:
Honest mistake → small penalty, sometimes waived if you disclose.
Careless → moderate penalty.
Deliberate → penalties up to 100% of the tax owed.
👉 Example:
You earn £3,000 profit in 2025/26 but don’t declare.
If you disclose in 2027, you’ll pay the tax due (~£600 if basic rate) plus interest.
If HMRC uncovers it in 2029, expect interest and penalties that could double the bill.
What If You Realise You Haven’t Declared?
Don’t panic! HMRC actually encourages voluntary disclosure. Acting first is always better than waiting for a brown envelope to land.
Here's how to fix it:
Register for Self Assessment if you haven’t already.
Use HMRC’s Digital Disclosure Service for past years.
Pay the tax plus interest.
Will you definitely get fined?
Not if you move quickly. Many people who disclose on their own only pay what they owe, with little or no penalty added.
Staying Out of Trouble Going Forward
Once you’re registered, staying compliant is more straightforward than most people expect. The most important habit is keeping records. Note down your sales and save receipts for expenses, even if it’s just snapping a quick photo on your phone. When the time comes to file your Self Assessment, usually due by 31 January each year, those records make the process much less stressful.
It’s also wise to set aside a portion of your profits for tax as you go. Around 20–30% is a safe buffer for most side hustlers and means you won’t face a nasty surprise when the bill arrives.
And don’t overcomplicate things with costly tools unless you need them. If your side hustle is still fairly small, a simple spreadsheet or a free bookkeeping app is more than enough to keep HMRC happy.
Why Playing It Safe Pays Off
Declaring side hustle income doesn’t automatically mean you’ll be hit with a big tax bill. What it really gives you is peace of mind and the confidence that you won’t face unpleasant surprises later on.
The golden rule is simple: if your turnover is over £1,000, you need to register and declare it. And if you’re ever unsure whether you should file, it’s always safer to declare anyway. Taking action early keeps HMRC off your back and frees you up to focus on what matters most, enjoying your side hustle without unnecessary stress.
Want to know more? Read our full guide "Tax on Second Jobs and Side Hustles in the UK (Updated 2025 Guide)"
Get Ahead of the Paperwork
If your side hustle has tipped over that £1,000 mark, the smartest move is to get organised before it becomes a headache.
Strive helps side hustlers and small business owners keep things simple: clear records, stress-free tax returns, and no nasty surprises from HMRC. Whether you’re catching up on last year or setting yourself up properly for the first time, we’ll make sure the numbers are handled so you can simply enjoy your side hustle.
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