Side hustle
Do I Pay Tax on Side Hustle Income If I'm Employed?
Written by Waqas Sagar ACA FCCA FMAAT · Chartered Accountant · Last reviewed 22 October 2026
How it works
PAYE handles your job. Your side business is reported separately on a Self Assessment return.
Because salary fills your lower bands first, side profit sits on top — which is why the rate can be higher than expected.
HMRC may collect small amounts by changing your tax code, but you still file a return.
National Insurance and other effects
Side profit above £12,570 attracts Class 4 National Insurance at 6%, even if your job already pays Class 1 through PAYE.
Extra income can also affect student loan repayments, Child Benefit if you or your partner earn over the threshold, and Universal Credit. These are worth checking before your income grows.
Your employment contract may require you to tell your employer about outside work. That is an employment question, not a tax one, but it is worth reading.
According to Waqas Sagar, Chartered Accountant at influencers.accountants, if a side hustle may push you over £50,270, pension contributions can help keep more in the basic band.
Example
Jamal earns a £35,000 salary and £8,000 profit from UGC work. All £8,000 falls in the basic rate band, so he pays about £1,600 Income Tax plus 6% Class 4 NI on it.
Illustrative figures only, based on 2026/27 rules.
What you need to do
- Track side income separately.
- Register once over the allowance.
- Set aside 25–30% of side profit.
- File by 31 January.
Want us to handle this for you? Our Self Employed Starter package covers registration, your Self Assessment return and expense review. See also our side hustle tax help and our page for freelancers.
Common mistakes
- 1Assuming your employer deals with it.
- 2Forgetting it pushes you into higher rate.
- 3Missing payments on account.
From our client work: We often see employees surprised to learn side profit is taxed at their top rate.
Frequently asked questions
Related questions
Official sources
Not sure where you stand?
Book a free 15-minute call with a Chartered Accountant who works with creators every day.
✓ Fixed monthly fees · ✓ ICAEW & ACCA regulated · ✓ 5,000+ clients served
This is general guidance for UK tax residents for the 2026/27 tax year, not personal advice. Speak to us about your situation.
