Craft fairs offer homemade products from established and new crafters alike. Many of us visit these events – and browse online platforms that help crafters reach wider audiences – in search of distinctive, handcrafted gifts. But, as more people start selling their creations and demand grows through popular online marketplaces, it is increasingly important for traders to understand the ‘side-hustle’ income threshold to avoid any unexpected tax bills.
The Craft Council’s 2025 Makers Survey highlights the scale of small and micro craft businesses: 94.9% reported having no PAYE employees over the past two years. In terms of earnings, the largest group (21.7%) make between £10,000 and £19,999 annually from their craft activities, while 42% earn some income from making alongside another job – placing a significant proportion in the side-hustle category.
So, what does HMRC consider a side hustle, and how could the tax rules affect you if your craft sales expand?
What is the side-hustle tax threshold?
If you earn more than £1,000 from self-employed or trading activities on top of your main job in a tax year, you must register as a sole trader and complete a Self Assessment tax return. This £1,000 limit refers to total income before expenses, not profit.
The £1,000 trading allowance is a single annual limit, so income from all your different side hustles is added together to determine whether you need to register.
Failing to tell HMRC when required can lead to unexpected tax bills or penalties, and delaying payment may increase the amount you owe. It is important to keep full and accurate records of your sales, income and expenses, as these will help you complete your tax return correctly.
The reporting threshold for Self Assessment is scheduled to rise to £3,000 a year ‘within this Parliament’, meaning up to 300,000 people will no longer need to file a tax return – though the £1,000 tax-free trading allowance will remain unchanged (see below).
New reporting system
A new online reporting process is planned for around 2029. Once introduced, it will allow individuals earning between £1,000 and £3,000 from side hustles to report this income directly to HMRC and pay the tax owed without completing a full Self Assessment return, significantly reducing the administrative burden.
How M+A Partners can help
M+A Partners’ tax experts provide specialist advice to guide you through the complexities of tax – helping you to plan ahead and remain compliant.
If you would like further guidance on making sure your tax affairs are in order, get in touch using the details below.
