If you’ve been running a side hustle this summer, you might be wondering if you need to pay tax through Self Assessment. This is a valid question: although it may be short-term work, it can still count towards your annual personal income for the given tax year. Read on below for a thorough guide to Income Tax Self Assessment for short-term work or employment.
What is Self Assessment?
Self Assessment is one of HMRC’s methods for collecting Income Tax. Although traditional employment will usually settle your Income Tax through PAYE, many other income streams require you to submit your own Self Assessment instead.
If you’ve been generating income independently for any length of time, it’s essential to understand how Self Assessment might apply to you, and what you need to do to comply. Please note that tax is generally now filed online; for more details, check out our handy guide to ITSA and Making Tax Digital overview.
When Is Self Assessment due?
In most instances, Self Assessment is due at midnight on 31 January each year. For instance, 31 January 2025 is the Self Assessment deadline for the tax year 2023–24.
If it’s your first Self Assessment, or if you didn’t submit one last year, then you will need to inform HMRC by 5 October (i.e. before the corresponding January SA deadline).
Registration is a critical step that allows HMRC to provide you with the necessary documentation and online access needed to file your return successfully. If you'd like to know more about the tax year and its relevant dates, we also have an article on tax dates and deadlines.
Which jobs require you to submit Self Assessment?
Not all types of employment require you to file Self Assessment for Income Tax. In most instances, it will depend on your employment status and total income. Read below for some example scenarios to find out more.
If you received pay from an employer:
If you signed a contract to work as an employee, and have received payslips, then you probably do not need to submit a Self Assessment return for Income Tax. This is because your employer usually deducts the correct Income Tax and NIC (National Insurance contributions) from your take-home pay.
This arrangement is referred to as PAYE (Pay As You Earn) and normally forms a part of your employer’s payroll system. Among other conditions, PAYE should apply to any employer with an employee earning more than £123 per week.
If your seasonal work seems to fit the description directly above, you likely do not need to worry about Self Assessment.
If you were a sole trader:
If your summer job entailed working for yourself, rather than employment by someone else, then you are likely a sole trader. An example of this might be if you sold clothing or other goods through online services such as eBay, Vinted or Depop during your summer break.
Other examples of potential sole trading might be private tutoring or freelance writing. Assuming that you reached the relevant income threshold (see below), you would be liable to submit Self Assessment for these income streams.
If you’re unsure whether you qualify as a sole trader, check out our blog post Am I a “Sole Trader”? for more details.
Self Assessment thresholds and allowances
Depending on the type and amount of income received, you might not be expected to pay tax on everything you earn. This is due to HMRC tax thresholds and tax-free allowances which might apply to your specific circumstances.
Personal Allowance
Personal Allowance is an overarching threshold for your personal income. As of 2024, you do not need to pay tax on any income up to £12,570. This means that there is 0% tax to pay on your income up to this amount; however, you might still need to file Self Assessment and declare your income anyway.
According to HMRC, you might be entitled to even more tax-free income if you claim Marriage Allowance or Blind Person’s Allowance. Contrastingly, if your income exceeds a certain level, you will no longer be entitled to Personal Allowance (source).
In addition to Personal Allowance, there are rules specifically for sole trading:
Self Assessment for self-employment (sole traders)
You must file Self Assessment if you earn more than £1,000 through sole trading within a given tax year. It doesn’t matter when exactly you earned this or for how long you were earning (e.g. for just a few weeks through the summer). So, if your summer side hustle exceeded ths threshold, don't forget to comply!
Please note that this figure (£1,000) refers to earnings before subtracting any tax relief such as business expenses. For a concise overview of allowable business expenses, read our article on tax relief.
TL;DR
- Summer jobs, even though only seasonal, count towards your annual taxable income
- If you were self-employed, you might need to send a tax return
- Self Assessment obligations vary depending on type and amount of income
- File Self Assessment for free today with AbraTax
If you found this article helpful, why not browse our blog for more useful tax insights aimed at small businesses, sole traders and landlords. If you want to know more about MTD, start with our quick guide.