A guide to side hustles and second jobs

A side hustle is a flexible, independent way to earn extra income alongside a main job.² (external link) People start side hustles for different reasons, such as to boost income, explore new interests, or develop business ideas. 

A second job, by contrast, is more like traditional employment. It usually involves a paid job with another organisation, often with fixed hours and responsibilities. 

Both approaches provide opportunities to increase income and gain new experiences.

You can earn extra income in various ways, depending on your schedule, skills, and interests. Some common side hustle ideas are: 

• Selling goods online – using online platforms like Etsy, Vinted, or Shopify to sell handmade or second-hand items.
• Tutoring – providing lessons in academic subjects, languages, or music. 
• Pet care – offering dog walking or pet-sitting services. 
• Content creation – running blogs, YouTube channels, or social media accounts that generate income through partnerships or advertising. 
• Virtual assistance – supporting small businesses with administrative tasks remotely. 
• Renting out space – earning income from a spare room, garage, or parking space. 
• Starting a side business – launching a small enterprise based on your expertise or passion, such as consulting, handmade crafts, or local services.

Starting a side hustle generally involves selecting an activity compatible with your existing commitments and working hours. Many begin as sole traders, which involves registering with HMRC (external link) and obtaining a Unique Taxpayer Reference (external link) (UTR) number.³ (external link) 

Some people set up a limited company instead. This requires registration with Companies House (external link) and taking on extra tasks, like filing annual accounts and paying Corporation Tax.⁴ (external link) It may be suitable if you earn significant income, hire employees, or plan to expand your side hustle into a larger business. 

Keeping accurate financial records can support compliance with HMRC tax requirements for side hustles and provide insight into overall performance.

Income from a side hustle may need to be declared to HMRC. 

Individuals earning less than £1,000 per tax year from self-employed activities can choose to use the trading allowance, meaning that income below this amount does not need to be declared.⁵ (external link) 

If your earnings exceed that threshold, registration for Self Assessment (external link) is required, and all earnings and expenses must be reported. However, the Government is set to raise the Self Assessment tax return reporting threshold to £3,000 by 2029.⁶ (external link) 

You can check if you need to report your income by visiting GOV.UK (external link) and answering a few questions.

Those who need to complete a Self Assessment must notify HMRC by 5 October and file online by 31 January. Paper returns are due by 31 October. Late registration or submission can lead to penalties.⁷ (external link)

A second job can affect how much tax you pay and the tax codes you're assigned. If you have more than one job, you'll receive a separate tax code for each one.⁸ (external link) 

Your tax-free personal allowance (£12,570 for the 2026/27 tax year) is typically applied to your main job. If your earnings from that job are below this threshold, you won’t pay any income tax on them. However, income from a second job is usually taxed from the first pound at the basic rate of 20%, since the personal allowance has already been used against your primary income.

Some side hustle jobs may require insurance depending on the nature of the work and the level of risk involved. Some common types include: 

• Public liability insurance, which can cover you if a third party claims they’ve suffered an injury or damage to their property due to your work. This may be useful if you work involves face-to-face time with the public, clients, or customers. 
• Professional indemnity insurance can protect you if a client claims they’ve suffered a financial loss due to your professional advice or services. It may be worth considering for side hustles like consulting, coaching, design work, or any freelance services where you provide expertise or advice. 

Cyber and data insurance may also be useful if you store client data. It can offer protection in the event of a data breach, security failure, illegal threat, or cyberattack. If your side hustle involves collecting and storing personal data, you’ll also be expected to register with the Information Commissioner’s Office (external link) and comply with GDPR (external link) requirements.

If part of a home is used for business purposes, such as converting a room into a workspace, local authority approval may be needed. This depends on the scale of activity and whether clients or deliveries are expected at the property.

Many people find that side hustle jobs not only increase their income but also help them gain new skills and career opportunities. With thoughtful management and planning, running a side hustle or business alongside full-time work can be both sustainable and rewarding. 

Establishing clear objectives, tracking your income, and keeping accurate records can help you stay organised and ensure compliance with HMRC tax regulations. Budgeting for expenses such as insurance, equipment, or software can help ensure that additional income is used efficiently. 

Checking employment contracts for any restrictions on outside work can also help you avoid conflicts of interest.