Self-Assessment Lite could free 300,000 from tax-return hassle

Taxman cuts red tape for side hustlers

Finally, some red tape is being taken away. Around 300,000 freelancers, side hustlers and micro-earners are expected to escape full Self-Assessment when the reporting threshold for trading and property income rises from £1,000 to £3,000. They will still owe tax above the existing £1,000 allowance, but a new simplified HMRC service should make declaring small amounts of income far easier. For people testing a business idea or earning a little extra on the side, this is exactly the kind of proportionate regulation micro-businesses need. The question is: can we have more of it?

Self-Assessment Lite

Around 300,000 fewer people will have to file tax self-assessments soon. We haven’t got an exact date yet, but the threshold for income on which you have to pay tax through the self-assessment system is going up from £1,000 to £3,000. Let’s hope this is the start of making the tax system more proportionate for micro businesses and not a one off.

• Startups.co.uk reports that “Up to 300,000 freelancers and side hustlers could be freed from the paperwork of filing a tax return” when the threshold rises to £3,000.

• Pie (tax software) confirms that from the 2027/28 tax year, individuals earning up to £3,000 in trading or property income will no longer need to register for Self-Assessment, provided they have no other reason to file.

• People earning £1,000–£3,000 from side income will no longer need a full Self-Assessment.

• They will still be taxed on everything over £1,000 but will be able to use a much simpler reporting service online.

• Those earning under £1,000 will still be fully exempt under the existing trading allowance and aren’t taxed on the £1,000.

This change is part of HMRC’s plan to simplify compliance and reduce paperwork for small earners, gig workers and side‑hustlers. The policy was announced in March 2025 and is scheduled to take effect by 2027/28, with the government committing to introduce it by 2029 at the latest.

The simplified online reporting service

The new system for people earning between £1,000 and £3,000 is designed to replace full Self-Assessment for people with small amounts of side income, typically gig work, hobby income, micro‑trading, or small‑scale property income. It’s “Self-Assessment Lite”.

You won’t need to register for Self-Assessment

If your trading or property income is:

• under £1,000 you’ll still be fully exempt (trading allowance)

• £1,000–£3,000 there will be no Self-Assessment, but you must report via the new service

• over £3,000 a full Self-Assessment will still be required

This is the key change that removes 300,000 people from the Self-Assessment system.

You’ll log in through your HMRC online account

HMRC will add a new section to your personal tax account:

“Report small amounts of trading or property income”

This will be a simple form; far shorter than a tax return.

You’ll enter just a few pieces of information

• Total income from your side activity

• Basic allowable expenses (optional: HMRC may offer a standard deduction)

• Net amount

• Confirmation you have no other reason to file a tax return

No need to list invoices, receipts and so on. It is designed to be quick, light‑touch, and accessible.

• HMRC will calculate the tax automatically and add it to your PAYE tax code or ask for a simple payment. There will be no need for tax software, accountants, full returns or manual calculations. HMRC will still expect you to keep basic evidence, but the burden is far lower. You’ll just need a note of income received and basic proof if HMRC asks (bank statements, receipts).

If you are employed HMRC adjusts your tax code and you pay gradually through your salary

If you are not employed, you make a simple online payment

A major simplification

Instead of completing a full tax return between April and January, you will:

• log in

• enter one number

• confirm no other tax obligations

• submit

HMRC expects the process to take under 10 minutes.

HMRC is doing this to reduce paperwork, errors and the number of people in Self-Assessment. It will make tax easier for gig workers and side‑hustlers, free up HMRC capacity and simplify compliance for micro‑earners. It is part of HMRC’s wider tax simplification agenda.

Who benefits most

• gig workers

• freelancers with small side income

• people selling crafts or goods casually

• tutors, babysitters, gardeners

• people renting a room occasionally

• micro‑traders

• early‑stage entrepreneurs

• people testing a business idea before scaling

This is why the change is being welcomed by SME groups. It’s a major reduction in admin for hundreds of thousands of people. Please can we have more of those moves towards a simplified system that’s proportionate and will help people avoid errors.