Many people have turned a hobby into a side hustle. If that’s you, it’s worth checking whether you need to pay tax on the money you earn.

With wedding season in full swing, some people earn extra income by designing wedding stationery, filming first dances, baking cakes, or offering other creative services.

If you earn more than £1,000 from your side hustle in a tax year, you may need to register for Self Assessment, complete a tax return, and pay tax on your profits.

Remember, the £1,000 trading allowance covers all your side hustle income. If you have more than one source of trading income, you must add them together before you check whether you’ve gone over the limit.

In most cases, you don’t need to tell HMRC about money from selling unwanted personal items. However, if you make or buy goods to sell for a profit, or you provide services for payment, HMRC is likely to treat this as trading.

Not sure whether your side hustle counts as taxable income? Get in touch with us today. We’ll explain what the rules mean for you and help you meet your tax responsibilities with confidence.

As outlined in Autumn Budget 2025, several changes took place on 6 April that may affect those who use the Construction Industry Scheme.

From April 2026, contractors are required by law to either:

• file a CIS return every month, including nil returns in months where they have not used a subcontractor; or
• inform HMRC in advance that they will not pay subcontractors that month by submitting an inactivity request.

From April 2026, with the nil filing requirement back in place, HMRC have reinstated a full CIS late filing penalty regime. If you file a late CIS return, a £100 fixed penalty will apply. You may also subsequently be charged:

• A second fixed penalty of £200 after two months.
• A tax-geared penalty at six months of a minimum of £300 or 5% of any liability which should have been shown on the return.
• A further tax-geared penalty at 12 months.
  • The amount of this penalty will depend on why the return was late.

In situations where a business makes or receives a payment they knew or should have known was connected to fraud, HMRC now have enhanced powers to immediately remove Gross Payment Status (GPS), assess for lost tax and charge a penalty of up to 30%. If GPS has been immediately removed, the time limit for reapplication is increased from one year to five years.

With just a few weeks to go until the beginning of a new tax year, a new round of tax changes take effect from April 2026. While many people won’t see a big difference in their day-to-day tax position, there are some areas worth having on the radar.

Here is a run-through of some of the changes you may want to be aware of.

Dividend Tax Rises

The tax rates for dividends are rising from April 2026. The basic rate and higher rates are each increasing by two percentage points to 10.75% and 35.75%, respectively. The dividend additional rate remains at 39.35%.

Many company owners rely on a combination of salary and dividends for their pay. If that’s you, it’s important to review how you draw income and whether your current mix of salary and dividends still makes sense.

Thresholds Remain Frozen

The tax-free personal allowance and income tax thresholds all remain frozen and are set to stay that way until 2030/31. That ongoing freeze will continue to pull more people into higher rates of tax.

For Scottish taxpayers, there is an increase to the basic and intermediate rate thresholds. This means that lower earners will see a small increase in their take-home pay. However, because of fiscal drag, higher earners will be increasingly drawn into paying additional tax.

National Insurance and Voluntary Contributions

People with gaps in their national insurance contribution (NIC) record, those who are self-employed with low profits, or those who work overseas often consider making voluntary contributions.

From 6 April 2026, the rate for Class 2 NICs (applicable to the self-employed) will be increased from £3.50 to £3.65. The rate for voluntary Class 3 NICs will increase from £17.75 to £18.40.

Aside from the increase in rates, a major change is that voluntary Class 2 NIC will no longer be an option for periods spent abroad. Making voluntary Class 3 contributions will be possible, but the qualifying criteria have been tightened.

 

 

 

Capital Gains Tax (CGT)

Business owners thinking about selling or restructuring should be aware that capital gains that are subject to business asset disposal relief or investor’s relief will be taxed at 18% for 2026/27, an increase from 14% in 2025/26.

Reliefs for disposals to employee ownership trusts have also been scaled back and the rules for share reorganisations have been tightened. Both changes are already in force.

These changes won’t affect everyone, but if you are considering business succession or restructuring, getting the timing and your approach right continues to be key.

Inheritance Tax – Agricultural and Business Property Relief Changes

As has been widely publicised, changes to Inheritance Tax (IHT) to Agricultural Property Relief (APR) and Business Property Relief (BPR) will come into force on 6 April 2026.

These reliefs were previously unlimited, but from April, 100% relief will be capped at £2.5 million of combined agricultural and business assets. Thereafter, the relief reduces to 50%. Unused amounts can be passed to a spouse or civil partner.

The £2.5 million limit is higher than initially proposed, but those who may be affected by the new cap may want to consider whether there are ways to rearrange their estate that would be effective in saving tax.

In Conclusion

If you are affected by any of these changes for 2026/27 and would like help in making sure you are in the best tax position possible, please get in touch. We would be happy to help you!