The Side Hustle Calculator: How Much Do You Need to Earn? (2026/27)

You want an extra £500 per month in your pocket from a side hustle. But how much does it actually need to earn before tax and NI to hit that target? The answer depends on your day-job salary, because side hustle income is taxed at your marginal rate — on top of everything you already earn. Our side hustle tax calculator below works backwards from your goal, showing the gross income your business needs to generate.

For example, if your day job pays £35,000 and you want £500/month extra after tax, you need to gross approximately £695/month (£8,334/year). Adjust the sliders to match your situation.

What is the £1,000 trading allowance?

The first piece of good news: if your total side hustle income (gross, not profit) is under £1,000 per tax year, it is completely tax-free. You do not need to register for Self-Assessment, declare it, or pay any tax or NI on it. This is the Trading Allowance, introduced in 2017.^[1]

Important: the £1,000 limit is on gross income (total received), not profit. If you earn £1,200 and spend £300 on materials, your gross income is £1,200 — above the threshold. You must then choose: either use the Trading Allowance as a flat £1,000 deduction (paying tax on £200), or deduct your actual expenses (paying tax on £900). You cannot do both.

When do you need to register for Self-Assessment?

Once your side income exceeds £1,000 gross, you must register with HMRC for Self-Assessment.^[3] The deadline is 5 October following the end of the tax year in which you first earned over the threshold. For example, if your side hustle earns £1,200 in the 26/27 tax year (ending 5 April), you must register by 5 October of that year.

Registration is straightforward — you can do it online through HMRC's website. See our first-time Self-Assessment guide for a step-by-step walkthrough.

Is side hustle income taxed at my marginal rate?

Here is the key point most people miss: your side hustle income is stacked on top of your day-job salary. Your Personal Allowance (£12,579) is already used up by your PAYE job. So every pound of side income is taxed at your marginal income tax rate from the first pound (after the Trading Allowance or expenses).

What that means in practice:

• Day job earns below £50,270: Side income is taxed at 20% income tax. If your self-employed profit exceeds £12,570, Class 4 NI of 6% also applies — giving a combined 26% marginal rate.
• Day job earns above £50,270: Side income is taxed at 40% income tax + 2% Class 4 NI = 42% marginal rate from the first pound.
• Day job earns £100,000+: Side income may face an effective 62% marginal rate due to the Personal Allowance taper (your PA is withdrawn at £1 for every £2 earned above £100,000, up to £125,140).

If you are near the £50,270 threshold, some of your side income may be taxed at 20% and the rest at 40% — the calculator above handles this automatically. For a detailed breakdown of how marginal rates work across all salary levels, see our pay rise take-home guide.

Class 2 and Class 4 National Insurance on side income

Self-employed individuals pay two types of National Insurance:^[2]

• Class 2: £3.45 per week (£179.40/year) if your profits exceed the Small Profits Threshold (£6,725). This gives you access to the State Pension and other benefits. If your profits are below £6,725, you can pay voluntarily.
• Class 4: 6% on profits between £12,570 and £50,270, then 2% above £50,270. These thresholds apply to your self-employed profits alone — they are not shared with your PAYE income.

An important distinction: Class 4 NI thresholds apply only to your self-employed profits. If your side hustle profit is below £12,570, you do not pay Class 4 regardless of your PAYE salary. Class 4 only kicks in when your self-employed profits themselves exceed £12,570. This means small side hustles (under £12,570/year profit) avoid Class 4 entirely — you only pay income tax at your marginal rate.

How much to gross: worked examples

Let us work through some real numbers. Assume no significant business expenses (or you are using the Trading Allowance as your deduction).

Goal: £500/month extra after tax. Day job: £35,000.

Your marginal income tax rate is 20%. Your side profits of £8,334/year are below the Class 4 threshold of £12,570, so no Class 4 NI. You need to gross approximately £695/month (£8,334/year). Verified net gain: £6,000/year — about £500/month.

Goal: £500/month extra after tax. Day job: £55,000.

Your marginal income tax rate is 40%. Side profits of £10,344/year are below the Class 4 threshold. You need to gross approximately £862/month (£10,344/year). Verified net gain: £6,000/year — about £500/month.

Goal: £1,000/month extra after tax. Day job: £45,000.

You are a basic-rate taxpayer but will cross into higher rate with sufficient side income. The first £5,270 of side profit (to reach £50,270 total) is taxed at 20%. Income above that is taxed at 40%. Target: approximately £1,389/month gross (£16,665/year). Verified net gain: £10,404/year — about £867/month.

Do not forget: you can deduct expenses

If your side hustle has genuine costs — materials, software subscriptions, advertising, a portion of your phone bill — you deduct these from your gross income to arrive at taxable profit. The less taxable profit, the less tax you pay. Common side hustle expenses include:

• Website hosting and domain names
• Software and tools (editing software, accounting apps)
• Materials and inventory
• Advertising and marketing costs
• Home office costs (£6/week flat rate without receipts)
• Phone and internet — a proportion of your bills

If your expenses exceed £1,000, claim actual expenses instead of the Trading Allowance. Use our freelancer tax calculator to model different expense levels and see the impact on your take-home.

The formula to work backwards from your goal

To find the gross income you need for a desired net monthly amount:

Required gross = Desired net ÷ (1 − marginal tax rate − applicable NI rate)

For a basic-rate taxpayer with side profits below £12,570: required gross = desired net ÷ (1 − 0.2) = desired net × 1.25. For a higher-rate taxpayer with Class 4 NI: required gross = desired net ÷ (1 − 0.42) = desired net × 1.72.

Then add back any expenses you expect to incur. If you can deduct £200/month in expenses, you need to earn the required gross plus £200 in total revenue. The interactive calculator above handles all of this automatically — including band-crossing effects.

Try it with the full calculator

Use the freelancer tax calculator to model your side hustle with specific expense amounts. You can also compare using our income tax calculator — enter your day-job salary, then add your side hustle income to see the combined picture. The difference in net pay shows exactly what your side income delivers after tax. Our gig economy tax guide covers platform-specific issues if you are working via Deliveroo, Etsy, or similar.

Sources

1. HMRC — Tax-free allowances on property and trading income. The £1,000 Trading Allowance for miscellaneous income from self-employment. Accessed July 2026.
2. HMRC — Self-employed National Insurance rates. Class 2: £3.45/week. Class 4: 6% on profits £12,570–£50,270, 2% above £50,270. Accessed July 2026.
3. HMRC — Register for Self-Assessment. Registration required when trading income exceeds £1,000. Accessed July 2026.