How Much Can You EarnBefore Paying Tax UK

The Short Answer

How much can you earn before paying tax in the UK? The number most people quote is £12,570. That is your Personal Allowance for the 2026/27 tax year. Earn less than that from all sources combined, and you owe no income tax.

But there is a second number that matters more if you have a side income: £1,000. That is the Trading Allowance. Earn more than £1,000 from self-employment in a tax year, and you need to register with HMRC and file a Self Assessment return, even if you owe no tax.

And if you already have a full-time job? Your Personal Allowance is already being used by your employer through PAYE. So your side income gets taxed much sooner than you might think.

This guide breaks down exactly when you start owing tax, how much, and what you need to do about it. Whether you are freelancing, selling on Etsy, earning from YouTube or OnlyFans, driving for Uber, or doing anything else on the side.

The £1,000 Trading Allowance

The Trading Allowance is the first threshold that matters for side income. It lets you earn up to £1,000 per tax year from self-employment or casual trading without telling HMRC anything.

No registration. No tax return. No records to keep. If your total self-employment income stays below £1,000, the Trading Allowance covers it completely.

Once you go over £1,000, you have two options:

1. 1

   Deduct the £1,000 allowance instead of claiming actual expenses. Simple, no receipts needed. Best if your expenses are low.

2. 2

   Claim your actual business expenses (equipment, software, home office, travel). Better if your expenses exceed £1,000. You cannot use both.

Most people earning over £5,000 are better off claiming actual expenses. If you are spending money on camera equipment, editing software, a home studio, or professional tools, those costs add up quickly past £1,000.

The Personal Allowance: £12,570

The Personal Allowance is the amount you can earn from all income sources before paying income tax. For the 2026/27 tax year, it is £12,570. It has been frozen at this level since 2021 and will stay frozen until at least 2028.

This covers everything: salary from your day job, self-employment profits, rental income, savings interest, and pension income. All of it stacks together against your single £12,570 allowance.

One thing that catches people out: if your income exceeds £100,000, your Personal Allowance starts to disappear. You lose £1 of allowance for every £2 earned above £100,000. By £125,140, your Personal Allowance is zero. This creates an effective 60% tax rate between £100,000 and £125,140.

Side Income With a Day Job

This is where most people get confused. If you have a full-time job paying £25,000, £35,000, or more, your employer is already using your entire Personal Allowance through PAYE. Your tax code (usually 1257L) tells your employer to give you £12,570 tax-free, then deduct 20% from everything above that.

So what happens when you start earning on the side? Your side income does not get its own Personal Allowance. It gets stacked on top of your salary.

Your day job tax code stays the same. HMRC does not tell your employer about your side income. The two are kept separate. You handle the side income through Self Assessment.

If your combined income (salary plus side income) pushes you over £50,270, the portion above that threshold gets taxed at 40% instead of 20%. This catches some people off guard. A £40,000 salary with £15,000 in side income means £4,730 of that side income falls into the higher rate band.

National Insurance: The Other Tax

Income tax gets the attention, but National Insurance is the one that blindsides people. If you are self-employed, you pay two types of NI on top of income tax.

Class 2 and Class 4 NI are calculated on your self-employment profits only. They are separate from any employee NI your employer deducts from your salary. You pay them through your Self Assessment return, not monthly.

If your self-employment profits are below £12,570, you can still voluntarily pay Class 2 NI to protect your State Pension entitlement. This costs £179.40 per year and is worth considering if you do not have enough qualifying years from employment.

HMRC Knows What You Earn: DAC7 Platform Reporting

Since January 2024, digital platforms are legally required to report your earnings directly to HMRC. This is called DAC7 (the EU Directive on Administrative Cooperation, which the UK adopted into domestic law).

Platforms covered include OnlyFans, YouTube, TikTok, Etsy, Vinted, eBay, Airbnb, Uber, Deliveroo, Fiverr, Upwork, and most other marketplaces where you can earn money. If you complete 30 or more transactions in a calendar year, or earn over €2,000 (roughly £1,700), the platform sends your details to HMRC.

They report your name, address, National Insurance number, and total earnings. HMRC cross-references this against Self Assessment returns. If you earned money on a platform and did not declare it, HMRC can see the gap.

When to Register for Self Assessment

You need to register for Self Assessment if any of the following apply:

• Your self-employment income exceeds £1,000 in a tax year
• You earned over £2,500 in untaxed income (rental income, investments, foreign income)
• Your total income exceeds £150,000
• You need to pay the High Income Child Benefit Charge (income over £60,000)
• You receive income from abroad that you need to pay UK tax on

Registration Deadline

Register by 5 October following the end of the tax year in which you first exceeded the threshold. Tax years run from 6 April to 5 April.

If you started earning over £1,000 in the 2025/26 tax year (ending 5 April 2026), you must register by 5 October 2026.

How to Register

1. 1Go to gov.uk/register-for-self-assessment
2. 2You will need a Government Gateway account (create one if you do not have one)
3. 3Enter your National Insurance number and personal details
4. 4HMRC will post your Unique Taxpayer Reference (UTR) within 10 to 14 working days
5. 5Use your UTR to file your tax return online

Filing and Payment Deadline

Your Self Assessment return and any tax owed are both due by 31 January following the end of the tax year. For the 2025/26 tax year, that means 31 January 2027. Miss the deadline and HMRC charges an automatic £100 penalty, even if you owe no tax.

Real Examples: How Much Tax You Would Pay

Numbers make it clearer. Here are three common scenarios for the 2026/27 tax year.

These examples assume you are claiming actual expenses. If your business has significant costs (equipment, software subscriptions, home office, professional services), your taxable profit will be lower than your gross income. See our full list of allowable expenses for what you can claim.

Expenses You Can Deduct

If your self-employment income exceeds the £1,000 Trading Allowance, you will want to claim actual expenses to reduce your taxable profit. HMRC allows you to deduct anything that is "wholly and exclusively" for business purposes.

Common allowable expenses for freelancers, creators, and side hustlers:

For a full breakdown with specific amounts and HMRC rules, see our guides on tax deductions for freelancers and content creator tax deductions.

Key Dates for 2026/27

What to Do Next

If you are earning side income, or you are self-employed and not sure where you stand with HMRC, here is what to do:

1. 1
   Add up your self-employment income. All platforms, all sources, for the current tax year. If it is over £1,000, you need to register (if you have not already).
2. 2
   Track your expenses. Every receipt, every subscription, every business purchase. Use accounting software like Xero or FreeAgent, or even a simple spreadsheet.
3. 3
   Register for Self Assessment at gov.uk if you have not already. It takes 10 minutes online.
4. 4
   Set aside money for your tax bill. A good rule of thumb: save 25% to 30% of your profit in a separate account. This covers income tax and National Insurance for most basic rate taxpayers.
5. 5
   Consider getting an accountant once your income exceeds £10,000 to £15,000. The tax savings from properly claimed expenses and structured income typically cover the cost several times over. We offer a free initial call to help you understand where you stand.

Frequently Asked Questions