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Posted: Tue 11th Mar 2025
The government is to increase the trading amount up to which the self-employed and side hustlers can earn before they are required to submit a tax return via Self Assessment.
Exchequer Secretary to the Treasury James Murray announced that the reporting requirement threshold for the trading income allowance will rise from £1,000 to £3,000 during the current Parliament.
According to Business & Accounting Daily, the measure will be introduced in the 2027/2028 tax year.
The government claimed the change will benefit around 300,000 taxpayers, with an estimated 90,000, including those running a side hustle, having no tax to pay and not having to report their trading income to HM Revenue & Customs (HMRC) via a tax return.
James Murray said:
"From trading old games to creating content on social media, we are changing the way HMRC works to make it easier for Brits to make the very most of their entrepreneurial spirit.
"Taking hundreds of thousands of people out of filing tax returns means less time filling out forms and more time for them to grow their side hustle."
The announcement was among several made in a speech by Murray to mark the 20th anniversary of HMRC at an event run by the Chartered Institute of Tax (CIOT) and the Institute of Accountants in England and Wales (ICAEW)
He also announced:
a "new simple online service" will be introduced for those earning between £1,000 and £3,000 who do need to pay tax.
a digital pilot will test ways to speed up trade processes for US and UK businesses.
a new digital service from April to make it easier for PAYE employers and employees to check and update employment and pension data held by HMRC.
simplifications will be made to make it easier for businesses to claim temporary admission, a relief which allows goods to be imported for a limited time with reduced or no import duties.
a new service will launch on 31 March to provide an "escalation route" for agents with Self Assessment and PAYE queries which are over four weeks old. It will focus on queries that haven’t been resolved using HMRC’s helpline and webchat.
The announcements come amid criticism of the service provided to taxpayers by HMRC.
In 2024, a Public Accounts Committee (PAC) report said customer services levels were at "an all time low" with only 66.4% of customers' attempts to speak to an adviser answered and average call waiting times exceeding 23 minutes.
In January this year, PAC said it was "concerned that HMRC has degraded its own phone services - willing to let them fail, in the hope that people will be forced to go online".
It called on HMRC "to take responsibility for how it has failed its customers, and to act with greater boldness to tackle tax system abuse and to more effectively pursue the debts it is owed".
Murray said he has been meeting firms including NatWest, Octopus Energy, Barclays, John Lewis, and Centrica with senior HMRC officials to learn best practice and innovative approaches to customer service.
The minister announced that as happens at banks and other private sector businesses, HMRC is trialling customers using their voice as their password to pass security checks.
The system is expected to be rolled out across HMRC later this year.
The tax department is also testing the use of generative AI to point taxpayers to the advice on the GOV.UK government website.
In another announcement, Murray said a new reward scheme for tax avoidance informants will launch later this year.
It will target serious non-compliance in large corporates, wealthy individuals, offshore and avoidance schemes.
He also said HMRC and the Insolvency Service have agreed a plan to tackle "rogue directors" who take advantage of the insolvency system, and from April 2026 it will be mandatory for tax advisers who interact with HMRC to register with the government.
In February, the government launched a consultation on electronic invoicing (e-invoicing) proposals and standardising the digital exchange of invoice information directly between buyers and suppliers.
Emma Jones CBE, founder of Enterprise Nation, said:
"This is good news for hundreds of thousands of people who plan to earn extra cash working on a side hustle this year.
"Almost half (47%) of businesses in the UK are now started this way, with self-starters keeping costs low and funding their new venture via a full-time job.
"Enterprise Nation's Start Up Ambition Report 2025 found that just under half of all UK adults are now considering starting a business or side hustle in 2025.
"A third (33%) say it's because they want to earn extra cash to keep up with rising costs but more than a quarter said it was to follow their dream.
"Younger generations are even more likely to start a business or have periods of self-employment as part of their long-term career trajectory. For example, 62% of 18-30-year-olds says they plan to start a business in the next 12 months.
"With that in mind, HMRC simplifying the way business owners and side hustlers manage their tax affairs digitally is a sensible course of action.
"Small business owners have lots to deal with and they don't want to spend hours on the phone trying to speak to tax advisers. We very much welcome the focus on improving HMRC customer service levels."
