Christmas Side Hustle Warning: HMRC Reminds Sellers About Tax on Festive Earnings
As holiday markets open and online platforms fill with handmade decorations and seasonal products, thousands of people across the UK start earning a little extra on the side. For many, this boost is simply part of the annual rhythm — a chance to turn creativity into cash or clear out items they no longer need.
But HMRC is urging anyone with a festive side hustle to double-check whether their seasonal income needs to be reported. The reminder comes as more people turn to Christmas markets, online marketplaces and content creation to supplement their main earnings — often without realising when the tax rules apply.
The £1,000 Trading Allowance
Under UK rules, everyone receives a £1,000 trading allowance each tax year. Earnings below this amount typically do not need to be declared.
However, once total income from all trading activity goes above £1,000 in the tax year, individuals must register for self-assessment, report their earnings, and pay any tax due. HMRC’s current campaign focuses specifically on festive sellers — from crafters producing decorations to individuals buying stock to resell — to ensure people understand when they cross that threshold.
This year’s Christmas earnings fall into the 2025–26 tax year, meaning declarations and any tax owed will be due by January 2027.
Hobby Selling vs Trading
The guidance stresses the difference between simply selling unwanted personal items and running a side hustle business. Decluttering — such as selling old clothes, unused electronics, or household goods — usually falls outside HMRC reporting requirements.
But making items to sell, buying stock for resale, or generating regular income from a side activity counts as trading. This applies even when the activity feels informal or small-scale, such as crafting in your spare time or flipping second-hand items online.
When Registration Is Required
Anyone who earned more than £1,000 from side-hustle activities during the 2024–25 tax year must register as a sole trader and file a self-assessment return by 31 January 2026.
Earnings from all trading activity are combined. For example, if someone earns £600 from crafts and £500 from content creation, the total crosses the £1,000 threshold even before expenses are taken into account. The trading allowance is based on income, not profit.
Even after registering, many people will not owe tax because the personal allowance — currently £12,570 — still applies. Allowable expenses related entirely to the side hustle can also be deducted, reducing the taxable amount.
Side Hustles That Fall Under These Rules
The tax rules apply year-round and cover a wide range of activities, including:
Selling
- Buying items to resell for profit
- Upcycling second-hand furniture
- Selling vintage or bulk-bought clothing online
Services
- Dog walking, pet-sitting or gardening
- Babysitting or tutoring
- Delivery work
- Renting out equipment or a parking space
Content Creation
Many online creators and influencers also fall within scope. When calculating income, they must include:
- Payments from platforms
- Sponsorship income
- The value of free products or services received in exchange for promotion
If someone is paid in a mix of money and goods, both contribute to the income total for tax purposes.
The Importance of Proper Record-Keeping
HMRC emphasises that anyone running a side hustle — even informally — is responsible for keeping accurate records. That includes invoices, receipts, sales logs, bank statements, and notes on expenses.
Good record-keeping ensures tax returns are completed correctly and reduces the risk of unexpected bills or penalties later.
Conclusion
With more people turning to side hustles to supplement household income, HMRC’s festive reminder aims to prevent accidental non-compliance. The Christmas period may be busy and creative, but the rules governing extra income remain constant throughout the year.
For anyone unsure whether their seasonal earnings cross the line into taxable territory, now is the time to check, organise records, and plan ahead — avoiding surprises long after the Christmas markets have packed away for the year.
Sterling & Wells
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