Side income over £1,000 may mean filing a tax return. HMRC is urging part-time earners to check their tax position for 2024–25, especially if they earn from casual work, renting, or crypto.

If you are earning extra income it is important to be aware of the tax implications.

The good news is there are two £1,000 tax allowances available for small amounts of miscellaneous income. The first is for property income and the second is for trading income. If you have both types of income, you can claim £1,000 for each.

• Trading Allowance: If you make up to £1,000 from self-employment, casual services (like babysitting or gardening), or renting out personal equipment (such as power tools), this income is tax-free and doesn’t need to be declared.
• Property Allowance: If you earn £1,000 or less from property-related activities (like renting out a driveway), you don’t need to report it to HMRC or include it in your tax return.

These allowances cover all relevant income before expenses. If your income is under £1,000, it’s tax-free. If you earn more than £1,000, you can choose to either deduct the £1,000 allowance from your income or list your actual expenses when calculating your taxable profit.

However, if your part-time income exceeds £1,000 in a tax year, you may need to complete a self-assessment tax return. This includes gains or income received from cryptoassets. Keep in mind this only applies if you are actively trading or selling services. If you are just clearing out personal possessions by selling them, there is usually no need to worry about tax.

If you are required to submit a tax return for the 2024-25 tax year, then the deadline to submit a tax return online and pay any tax owed is 31 January 2026.

You must tell HMRC if you no longer need to file a tax return. Whether you have stopped trading or no longer rent out property, notifying HMRC early avoids penalties and keeps your records up to date.

If your circumstances have changed and you believe you no longer need to complete a self-assessment tax return, then it is important to notify HMRC as soon as possible. This gives HMRC time to review your request and update your records before the 31 January filing deadline. Penalties could be incurred if you do not inform HMRC in a timely manner.

You may no longer need to submit a tax return if, for example:

• you’ve stopped being self-employed;
• you no longer rent out property; or
• you no longer pay the High Income Child Benefit Charge.

If you are unsure, HMRC provides an online tool to help you check if you need to submit a self-assessment return. This can be found at https://www.gov.uk/check-if-you-need-tax-return

You can notify HMRC that you no longer need to submit a tax return by signing in to your online account and completing an online form to close your self-assessment account, You can also use this form to request removal from self-assessment for a particular tax year. You will need to have your National Insurance and Unique Taxpayer Reference (UTR) numbers in order to complete the form. Alternatively, you can contact HMRC by phone or post if you are unable to use the online service.

After submitting your request, you can track its status online. HMRC will confirm in writing whether you still need to file a self-assessment tax return.

You may need to submit tax returns for someone who has died. As the personal representative, you are legally responsible for reporting income earned before and after death.

This person, known as the ‘personal representative’, is legally responsible for dealing with the deceased’s money, property and possessions. This includes reporting income earned both before death and income generated by the estate afterwards.

HMRC will inform the personal representative if self-assessment return is needed for the deceased. If so, they will send the necessary forms. To complete the return, the personal representative will need financial details such as:

• Bank and savings records
• Dividend statements
• Employment documents (P45 or P60)
• Pension and state pension information
• Income from property or self-employment

The tax return must be sent by post to meet the deadline provided in HMRC’s letter. The personal representative can also appoint an accountant or other professional to assist in compiling the tax return.

If the estate continues to generate income (e.g., from rent or investments), the personal representative may also need to:

• Register with HMRC
• Submit a separate tax return for this income

Where you live determines if you pay Scottish Income Tax. The rules are not based on where you work, who pays you, or national identity, but on your main UK home during the tax year.

The definition of a Scottish taxpayer is generally linked to the question of whether the taxpayer has a 'close connection' with Scotland or elsewhere in the UK. The liability to Income Tax at Scottish rates is not based on nationalist identity, location of work or the source of a person’s income e.g., receiving a salary from a Scottish business.

The Scottish rate of Income Tax (SRIT) is payable on the non-savings and non-dividend income of those defined as Scottish taxpayers. HMRC’s guidance states that for the vast majority of individuals, the question of whether or not they are a Scottish taxpayer will be a simple one – they will either live in Scotland and thus be a Scottish taxpayer or live elsewhere in the UK and not be a Scottish taxpayer. 

If a taxpayer moves to or from Scotland from elsewhere in the UK, then their tax liability for the tax year in question will be based on where they spent the most time in the relevant tax year. Scottish taxpayer status applies for a whole tax year. It is not possible to be a Scottish taxpayer for part of a tax year.

You may also need to pay Scottish Income Tax if you live in a home in Scotland and also have a home elsewhere in the UK. In this case, you need to identify which is your main home based on published guidance and the facts on the ground. You may also be liable to SRIT if you do not have a home and stay in Scotland regularly, for example you stay offshore or in hotels.

From April 2024, the cash basis is the default method for sole traders and most partnerships when preparing Self-Assessment returns. Designed to simplify tax reporting, the cash basis lets businesses record income and expenses when money actually moves, easing the admin burden for many. Those who prefer or need traditional accruals accounting must actively opt out when submitting their tax return.

Businesses that prefer traditional accruals accounting or who are ineligible for the cash basis, must opt out of the cash basis when submitting their self-assessment return.

A number of other changes to the cash basis took effect from April 2024. This included the following:

• The removal of the turnover thresholds for businesses to use the cash basis.
• The removal of the restrictions on using relief for losses made in the cash basis, aligning the rules with accruals.
• Interest restrictions have been removed so both cash basis and accruals accounting are subject to the same tax rules.
• People with more than one business are able to choose whether they use the cash basis or accruals accounting for each business they have, rather than having to pick one method for all their businesses.

The cash basis is not available to limited companies and limited liability partnerships.