Tax relief for side hustles threshold for UK tax returns to rise to three thousand pounds by 2029

Up to 300,000 individuals in the UK who earn additional income through side hustles such as selling second-hand clothes, dog walking, or gardening could soon benefit from not having to complete a self-assessment tax return. This change was announced as part of the government’s effort to simplify the process for part-time entrepreneurs who are supplementing their income through smaller-scale activities.

The current threshold for trading income before a self-assessment return is required stands at £1,000 per year. However, in a significant policy shift, this amount is set to triple to £3,000 annually. While this doesn’t mean individuals will pay less tax on their income, it does reduce the administrative burden. Income above £1,000 must still be declared and taxed, but the filing requirements will only apply once the £3,000 threshold is reached.

The government’s aim with this reform is twofold. On the one hand, it allows workers to benefit from their entrepreneurial ventures more easily. On the other, it helps alleviate the growing workload faced by HM Revenue & Customs, which has been struggling with long response times and customer service delays. Government representatives have also stated that taxes owed on income below £3,000 could soon be processed through a simplified online service or potentially through adjustments made to PAYE tax codes.

Industry experts highlight that this move is reflective of the modern working landscape, where having one primary job is increasingly replaced or supplemented by secondary income streams. From trading handmade goods to monetising social media activity, small-scale side hustles are becoming more commonplace. This policy change sends a positive signal to part-time entrepreneurs about the government’s recognition of these shifting employment trends.

Although welcomed by many, the implementation timeline for this change remains vague. The legislative shift is expected to occur “within this parliament,” which means it may not be fully enacted until 2029. However, those who operate small-scale ventures are optimistic that the new system will reduce unnecessary complications and make compliance simpler in future years.

Despite this announcement, it’s essential to note that existing tax laws remain in place. Everyone has a trading allowance of £1,000 per year, which remains tax-free. Any income exceeding this will continue to be subject to tax, regardless of whether self-assessment filing is required. The new structure primarily focuses on simplifying the method of reporting and removing the need for thousands of part-time workers to submit forms altogether.