Tax Alert as Britain’s Side Hustle Boom Draws HMRC Scrutiny

More than 16 million people in the UK are now engaged in side hustles, generating additional income amid the ongoing cost-of-living crisis. This marks a significant increase of 158% since 2023, when only 6.2 million individuals were estimated to be involved in such activities, according to data from barrister Patrick Cannon. The trend has prompted the HM Revenue and Customs (HMRC) to issue a warning for those planning to earn extra income in 2026.

Research conducted by side hustle experts at OddsMonkey reveals that nearly two in five Brits—39%—are now supplementing their earnings, with an average monthly income of £914. Despite this financial boost, many individuals are failing to declare their earnings, raising concerns from HMRC.

As household budgets tighten, the study indicates that 48% of respondents are anxious about meeting their monthly bills, while 28% express worries regarding rent or mortgage obligations. The rise in side hustles, which encompass activities like selling second-hand items, baking, blogging, and freelancing, reflects a growing need for financial security.

Popular Side Hustles and Earnings

Selling unwanted items remains the most common side hustle, with 68% of participants using platforms such as Vinted, eBay, and Depop to generate an average income of £165 per month. Other popular avenues include crafting (£163), baking (£183), and blogging (£231). Notably, selling beauty products has emerged as the most profitable side venture, averaging £249 monthly.

The report highlights differences in participation based on demographics. Approximately 43% of men engage in side hustles compared to 34% of women. Generational trends show that 60% of Gen Z workers and 55% of Millennials are actively pursuing additional income, with Millennials earning an average of £1,321 monthly from side jobs.

Despite the potential for earning nearly £3,000 annually from these activities, a concerning 34% of side hustlers admit to not reporting their income to HMRC. The tax authority has clarified that while casual sellers emptying their homes need not worry, those earning more than £1,000 annually from sales may be required to declare this income.

HMRC’s Warning and Compliance Measures

Individuals selling personal items valued over £6,000 in a single transaction may also trigger capital gains tax liabilities. Those required to declare their earnings must register for Self Assessment as a sole trader, with HMRC emphasizing the importance of compliance to avoid unexpected tax bills or penalties.

Peter Watton, a spokesman for OddsMonkey, commented on the situation, stating, “With the constantly increasing cost of living, we were hardly surprised that Brits are having to take up side hustles in order to earn themselves some extra cash. While it is great that Brits are using their passions to earn extra income, it is important to remember to declare any income over £1,000 to ensure you don’t get in trouble with the tax man.”

As side hustles become increasingly integrated into British life, HMRC’s heightened focus on additional earnings in 2026 signals the need for compliance. Watton cautioned that what begins as a simple way to earn extra income could lead to significant tax repercussions if regulations are not observed.