Andy Burnham’s trading allowance increase April 2027 will let people earn up to £3,000 tax free from a side hustle from April next year. The change also removes the need to report that income to HMRC. For people topping up wages with small sales or freelance work, the gain is immediate: a higher threshold and less paperwork.
£3,000 is the new ceiling, up from £1,000 a year, after Burnham said the amount people can earn from a side hustle without paying tax has been tripled. He said around 400,000 people could see an average £380 off their tax bill, and described the measure as a way to make it easier to earn a bit extra or test a business idea.
Andy Burnham and HMRC
From April next year, the rule will change for people earning extra money outside their main work, including the examples Burnham gave of Vinted sellers, dog walkers, pet-sitters and teachers doing extra tutoring. Under the current rule, anyone taking in more than £1,000 a year from a side hustle has to start paying tax on it; after the change, the tax-free band rises to £3,000 and the reporting burden falls away as well.
£3,000 is not a replacement for the personal tax allowance; it is a separate trading allowance for side income. That distinction is why the policy matters to people who have a small stream of extra earnings but do not want those receipts treated as their main income. If a reader is running a modest side business, the practical change is that more of the first pounds earned stay outside the tax charge before HMRC involvement begins.
Mary Watson asks the hard question
Mary Watson captured the muddle in one line: “How do you define a side hustle? I'm a self-employed gardener, smallholder, plant nursery, greetings card sales, should I pick one to be the side” She was not alone. Ed Broughton asked, “I'm self-employed. Does this mean that I don't have to declare £3,000 of earnings? I think not. What's the difference between someone having a side hustle and me putting in an extra few hours every weekend?”
400,000 people may benefit, but the boundary is the part readers need to watch. Luke Lancaster asked why the personal tax allowance was not raised instead; Andrew Partlett said a higher income tax threshold might avoid the need for a side hustle altogether; and Ben Saunders asked whether extra hours at work to cover daily needs would count. The rule gives a bigger tax-free cushion, but the unresolved practical issue is how HMRC will separate a side hustle from self-employed work or extra paid hours in a regular job.
Burnham’s tax push
Last month Burnham announced a crackdown on headphone dodgers who play loud music on public transport. In July he announced the government would remove VAT from electricity bills, and before last week's budget he said tariffs would be removed on more than 100 products, a move he said would save households around £21 on food shopping over the course of a year. The new side hustle allowance sits alongside those smaller, high-profile tax and cost-of-living changes.
April next year is the point at which the new allowance starts, but the sharper test comes after that: how the rule is applied in practice when someone sells online, tutors after work or runs a small service on the side. Burnham has promised the extra money should stay with the earner; the remaining issue is whether HMRC can draw that line cleanly enough for people to know when the £3,000 shield applies.
