HMRC change means 300,000 will not need to file tax return

New change will make admin easier for side hustles

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The government is making it easier for people to manage the taxation aspect of ‘side hustles’. 

By 2029, the self assessment reporting threshold for trading income will rise from £1,000 to £3,000. The tax-free threshold will stay at £1,000 – but this change will simplify the way that you report your earnings from side hustles to HMRC.

For many people aged 55 and over, finding ways to supplement income in later life is becoming more important. Many retirees are turning to side hustles – small business ventures or freelance work – to boost their income. 

Now, thanks to a change in HMRC rules, the admin side of these extra earnings will soon be easier to manage for more people.

What’s changing?

At the moment, if you earn more than £1,000 a year from trading income – such as selling crafts, offering gardening services, or renting out a spare room – you have to report it to HMRC via a self-assessment tax return. However, by 2029, this threshold will rise to £3,000. 

To summarise what the new rules will look like:

• Anyone earning less than £3,000 in a financial year from trading income will not have to complete a full self assessment tax return.
• If they earn more than £1,000 but less than £3,000 from trading income, they will be able to declare this via a simpler online portal. This means that around 300,000 people will no longer need to file a tax return for small-scale earnings. 
• For people earning less than £1,000 in trading income, the situation stays the same: they won’t have to report this income or pay tax on it.

Laura Suter, director of personal finance at AJ Bell, welcomed the move, saying it will particularly help those who earn a little extra on top of their PAYE-taxed salary. “It will also help those whose only income source is a small amount of trading income which they don’t need to pay tax on,” she said.

More ways to top up your income

If you’re considering a side hustle, there are plenty of options to explore. Many retirees have found success with:

• Online selling – Using platforms like eBay, Etsy or Vinted to sell handmade or second-hand items.
• Freelancing – Offering skills such as writing, consulting or tutoring.
• Pet sitting or dog walking – A great way to stay active and earn extra cash.
• Renting out a driveway or spare room – Websites like JustPark or Airbnb make this easy.

Of course, a side hustle isn’t for everyone, and if you need a lump sum of tax-free cash, equity release might be an option. But it’s important to consider all your options. Downsizing, using savings, or arranging a short-term loan are all potential alternatives to equity release, depending on your circumstances.

Here at Equity Release Wise, we want you to feel confident in your financial choices. If you’re exploring equity release, our selected advisers will discuss all the alternatives with you as part of the process, so you can make the best decision for your needs.

Equity Release Wise can connect you to one of our selected advisers who can help you make the right decision. Call free on 0808 178 3055 or request a call back at a time convenient to you.

Source

The tax-free threshold for trading income will rise from £1,000 to £3,000: Nearly 300k people will not need to file tax return amid HMRC changes. FT Adviser. Accessed 17 March 2025.

About Clare Yates. With over a decade’s experience writing about later life financial planning, Clare offers a wealth of knowledge about equity release, pension annuities, wills, LPAs and more. When she isn’t writing, Clare likes to spend her time baking and going on walks with her husband, two children and their rescue dog. Follow Clare on LinkedIn