HMRC issues tax warning over Christmas side hustles

Helming Christmas market stalls, making social media content or selling items online can be a great way to boost your income as festive costs mount.

But anyone who is taking on seasonal self-employed work this Christmas is being urged to ensure their taxes are in order.

Tax experts are warning that those who fail to comply to HM Revenue and Customs (HMRC) rules on making money from side hustles could find themselves in hot water with fines and penalties.

UK law says everyone has a trading allowance which means you can earn up to £1,000 each tax year on top of your main job without paying tax. But any earnings above this are subject to taxation, which will vary depending on how much you are making.

Anyone who earned more than £1,000 from side hustles in the 2024-25 tax year (6 April 2024 to 5 April 2025) will need to register for self-assessment as a sole trader, according to HMRC. You should then file a tax return and pay any tax due by 31 January 2026.

Any sales made this Christmas will fall into the 2025-26 tax year and need to be declared, and any tax on them paid, by the end of January 2027.

HMRC has launched a Help for Hustles campaign to help traders understand when tax rules apply to them.

It details important distinctions in money-making – such as the difference between selling unwanted personal belongings to declutter homes and selling items which have been made in order to make profit.

It provides a free and anonymous checker for anyone who is unsure where they stand, and sets out specific guidance for content creators.

The tax office warned the £1,000 allowance applies to all activities combined – so if you earned £800 from selling crafts online and £400 from content creation, you would still surpass your trading allowance and need to pay tax.

It also said traders should be aware this is the figure before expenses, and is not the same as profit.

If you have no other income then you may not necessarily need to pay tax if you earn under £12,570 a year, as this is your personal allowance which is not subject to tax.

You may also be able to deduct some “allowable expenses” from your tax bill if they are costs that are entirely related to your side hustle. This can include things such as office costs for stationary, and you can ask HMRC for advice if needed.

“As your side hustle grows, any unpaid tax might come under the spotlight,” HMRC said. “This could lead to an unexpected and possibly very large tax bill if you haven’t told us about the extra money you’ve been earning.

“That’s why it’s really important to stay on top of your tax affairs. So, make sure you pay what you owe as soon as you can and talk to us as soon as possible if you haven’t paid for previous tax years.”