The United Kingdom will raise the tax-free allowance for income earned from side hustles to £3,000 starting in April 2027, offering relief to millions who earn extra money through hobbies or small-scale trading. This marks a significant increase from the current threshold of £1,000, potentially benefiting up to 1.4 million people.

The change was announced in the latest budget and is designed to ease the tax burden on those who supplement their income by selling goods or providing services such as tutoring, dog walking, or reselling clothes. Data from HM Revenue and Customs (HMRC) indicates that side hustling has grown rapidly in recent years. In 2023, approximately 2.6 million people earned money through marketplaces like eBay, Vinted, and Etsy, a substantial rise from 450,000 in 2024.

Under the existing rules, income from side earnings exceeding £1,000 is subject to taxation if the individual's total annual income surpasses the £12,570 personal allowance. The upcoming increase in the trading allowance will reduce the number of taxpayers and administrative obligations for many involved in casual selling or small businesses. It is estimated that about 400,000 people will see a decrease in their tax bills, with average savings of £380, while around 100,000 will no longer need to report their trading income to HMRC.

Financial experts have welcomed the change as a simplification measure. Sarah Coles, head of personal finance at AJ Bell, noted that raising the allowance removes much of the administrative burden for those with smaller side businesses, allowing them to earn up to £3,000 before needing to file a self-assessment tax return.

Meanwhile, consumer advocate Jane Hawkes emphasized the importance of understanding tax rules, particularly the distinction between selling personal belongings and conducting trade for profit. According to regulations, selling used personal goods at or below their original purchase price is not subject to tax. However, platforms now have a responsibility to report sellers to HMRC who have completed 30 or more sales or earned over €2,000 (approximately £1,700) in the previous year.

The adjustment reflects the government’s response to the growing gig and resale economy, aiming to streamline tax compliance while supporting individuals generating supplementary income through non-traditional work.