Tax on Side Income: What Brighton Earners Need to Know

Brighton has always had a strong culture of side hustles — freelance work alongside employment, letting a room, selling online, or turning a hobby into something that earns. What many people do not realise is that almost all of this is taxable, and HMRC has become significantly better at identifying undeclared side income.

Here is what you need to know.

The basic rule

If you earn money from any source beyond your employment, it is almost certainly taxable. The question is not whether it is taxable — it usually is — but how much tax you owe and how to report it correctly.

Income tax is charged on all taxable income above your personal allowance (£12,570 for 2025/26). If your total income — employment plus side income — pushes you into a higher tax band, you pay the higher rate on the excess.

The trading allowance

There is one important exemption. The trading allowance allows you to earn up to £1,000 per tax year from self-employment or casual income without paying tax or filing a return. If your gross side income is under £1,000 in a tax year, you do not need to do anything.

Note: this is a gross figure — before any expenses are deducted. If your income is £1,200 but your expenses are £500, the trading allowance does not apply because your gross income exceeds £1,000.

Freelance and consulting income

Freelance work alongside employment is extremely common in Brighton — particularly in tech, creative, and professional services. This income must be declared through a self-assessment tax return, and you will pay income tax and Class 4 National Insurance on the profit (income minus allowable expenses).

If your freelance income grows significantly, you should consider whether a limited company structure makes financial sense. The crossover point is typically around £30,000–£35,000 of freelance profit per year.

Renting out a room or property

The Rent a Room scheme allows you to earn up to £7,500 per year from letting a furnished room in your own home tax-free. Above that threshold, the surplus is taxable.

Renting a second property is different — all rental income above allowable expenses is taxable. Since Section 24 was fully implemented, mortgage interest can no longer be deducted as an expense — instead, you receive a 20% tax credit. For higher rate taxpayers, this is a significant restriction.

Selling things online

Selling old possessions online occasionally is not trading and not taxable. Buying things specifically to sell them online for profit is trading — and the profit is taxable. HMRC receives data directly from platforms including eBay, Etsy, Vinted and others, so undeclared trading income is increasingly easy for them to identify.

If you are running an online business — even a small one — you need to keep records and declare the income.

Gig economy work

Uber, Deliveroo, TaskRabbit, and similar platforms pay you as a self-employed contractor. Tax is not deducted at source. You are responsible for declaring the income and paying the tax due. If the amounts are significant, National Insurance also applies.

Interest, dividends and investments

Most people have a Personal Savings Allowance (£500 for higher rate taxpayers, £1,000 for basic rate) and a Dividend Allowance (£500 for 2025/26). Income above these thresholds needs to be declared. If you have significant investment income, self-assessment is the mechanism for doing so.

Do you need to file a self-assessment return?

You need to file if your side income exceeds the trading or property allowance, if your total income exceeds £100,000, or if you have untaxed income of any kind that is not covered by an exemption. If you are unsure, call us — it takes five minutes to confirm either way.

What HMRC can see

HMRC receives data from banks, platforms, pension providers, and overseas tax authorities under automatic exchange agreements. They also use data analytics to cross-reference declared income against lifestyle indicators. The days of undeclared cash or online income going unnoticed are largely over. Compliance is not optional — it is a practical necessity.

What you can claim against side income

Against any self-employed side income, you can claim expenses that are wholly and exclusively for the business. For a Brighton freelancer, this typically includes a proportion of home office costs, equipment, professional subscriptions, relevant software, and business travel. Good records are essential to supporting these claims.