Side income alongside a job and MTD for Income Tax

acrenvo.com/guides/mtd-side-income-alongside-a-job, last reviewed 25 October 2026

If you have a job or a pension as well as rent or self-employment, Making Tax Digital (MTD) for Income Tax measures only your self-employment and property income, before expenses, against its threshold. All other sources of income do not count towards your qualifying income. GOV.UK’s examples include employment (PAYE), a State Pension and private pensions.

Hannah is fictional. She works as a teaching assistant on a salary of £24,000, and in the evenings she tutors secondary pupils in maths, which brings in about £9,000 a year. Added together, her income is well over £20,000, and a colleague has told her that means Making Tax Digital (MTD) for Income Tax will apply to her. She would like to check before she buys anything.

Her colleague has added the wrong figures together. MTD for Income Tax looks at only part of your income, and a salary is not in that part. This guide explains which income is measured, how to tell whether your side income is a business, and what to do as it grows.

A job and a business at the same time

You can run a business and be employed at the same time, for example if you work for an employer during the day and run your own business in the evenings. The question for the side income is whether it counts as trading. You’re likely to be trading if you:

• sell regularly to make a profit
• make items to sell for profit
• sell items on a regular basis, either online, at car boot sales or through classified adverts
• earn commission from selling goods for other people
• are paid for a service you provide

If you only occasionally sell items or rent out property (for example through auction websites or short-term rental apps), check if you need to tell HMRC about this income. Contact HMRC for advice if you’re not sure whether you’re trading.

Only part of your income is measured

Qualifying income is your total income from self-employment and property, before expenses (also known as turnover), based on the tax return you submitted in the previous tax year. All other sources of income do not count towards your qualifying income. GOV.UK gives these examples of income that does not count:

• employment (PAYE)
• your share of profit from a partnership as an individual partner
• dividends (including those from your own company)
• a State Pension
• private pensions

If your other income is a pension

A pension does not count towards your qualifying income, because GOV.UK lists a State Pension and private pensions among the other sources of income that are left out. What does count is your income from self-employment and property, so the same rule that leaves out Hannah’s salary leaves out a pension too. If you are retired and let property, or do some work for yourself, it is the rent and any trading income, before expenses, that are measured against the threshold.

You do not need to create digital records for all other sources of income reported through Self Assessment, but you can choose to do so. GOV.UK names a State Pension and private pensions among them. If you decide to create a digital record of your other income, it will help you get a more complete view of your tax affairs, because when you send a quarterly update you will see an estimate of your tax bill which includes this income. You’ll need to check your software has the option to report the other income source during the tax year. If not, you must include all income sources in your tax return before you submit it using your software.

Telling HMRC about side income

MTD is a separate question from whether HMRC needs to know about your side income at all. Check if you need to tell HMRC about income that’s not from your employer. This may include money you earn from things like:

• selling things, for example at car boot sales or auctions, or online
• doing casual jobs such as gardening, food delivery or babysitting
• charging other people for using your equipment or tools
• renting out property or part of your home, including for holidays (for example, through an agency or online)
• creating content online, for example on social media

For trading income, the £1,000 trading allowance sets the line. If your gross trading income is over £1,000, you must register for Self Assessment by 5 October in the following tax year. The allowance has one exception that people with a job should know about: you cannot use it if you have trade or property income from your employer or the employer of your spouse or civil partner. The guide to the trading allowance sets out the rest of the rules, and GOV.UK’s additional income checker will tell you whether you need to report what you earn. If you do report it through Self Assessment, the guide to paying your January Self Assessment bill explains what falls due and how to spread the cost.

If you let property and have letting income from earlier years that you have not told HMRC about, the Let Property Campaign is HMRC’s route for putting it right, and the guide to the Let Property Campaign explains who can use it.

If the side income grows

If the business side grows, it is that part alone that could take you over £20,000. If your income is above the relevant threshold HMRC will write to you, confirming that you need to start using Making Tax Digital for Income Tax by the start of the following tax year. The guide to going over £20,000 explains which tax year HMRC looks at, and what to expect if you go over the line in a later year.

If you also earn rent, that counts too, because qualifying income adds self-employment and property income together. The guide to property and self-employment income works through that case. When you are ready to look at software, the guide to the lowest-cost ways into MTD lists the free plans among the products we compare.

Questions people ask about side income and MTD