The government has announced a significant change to Income Tax Self Assessment, raising the reporting threshold from £1,000 to £3,000 as of 11th March 2025. This means that up to 300,000 individuals — many of whom earn extra income from side hustles — will no longer need to file a tax return. Whether you sell clothes online, walk dogs, drive for a rideshare service or create content, this change could simplify your tax obligations. However, it’s important to understand what this means for your individual situation and whether you still need to report your income.
Who will benefit from this change?
The increase in the Income Tax Self Assessment threshold is great news for freelancers, gig workers and individuals earning small amounts of extra income. Previously, anyone earning more than £1,000 from self-employment or side jobs had to file a Self Assessment tax return. Now, that threshold has tripled to £3,000, reducing the administrative burden for many taxpayers. HMRC estimates that around 90,000 people will no longer have any tax to pay or any need to report their trading income at all.
If your self-employed income remains under £3,000, you won’t need to file a tax return unless other factors — such as receiving untaxed income from investments or rental properties — apply. However, if your total earnings exceed £3,000, you’ll still be required to complete Income Tax Self Assessment and report your income to HMRC.
What if you still need to file an Income Tax Self Assessment?
Even with the new threshold, many self-employed individuals and side hustlers will still need to file an Income Tax Self Assessment. If you earn over £3,000 from self-employment, are a partner in a business partnership, or have additional taxable income such as dividends or rental income, you must continue to report your earnings. Additionally, those who need to pay the High-Income Child Benefit Charge or have capital gains tax obligations will still be required to submit a return.
If you are unsure whether you need to file an Income Tax Self Assessment, it’s always best to check with a tax professional like Accounts & Returns. Mistakes or missed filings can result in penalties, so it’s essential to stay informed about your obligations.
Should you still keep records of your additional income?
Even if you are no longer required to file an Tax Self Assessment, keeping accurate financial records is always a good idea. There may be future changes to tax rules and maintaining records ensures that you’re prepared if HMRC ever requests information about your earnings. Additionally, if your side hustle grows and your income exceeds £3,000, you’ll need proper records to report your income accurately.
Tracking your income and expenses can also help you understand whether your side hustle is becoming a viable business. If you’re earning close to the threshold, you may want to consider registering as self-employed and exploring ways to make your business more tax-efficient.
Keep on top of your tax obligations with expert advice
The increase in the Income Tax Self Assessment threshold provides welcome relief for many individuals earning additional income. However, tax rules can be complex and it’s important to understand whether you still need to report your income to HMRC. If you’re unsure, seeking professional advice can help you navigate the changes and ensure you remain compliant.
At Accounts & Returns, we help individuals and businesses stay on top of their tax responsibilities, whether they need to file an Income Tax Self Assessment or not. If you need guidance on whether you’re affected by the new threshold, get in touch with us today.
