Managing tax with multiple income streams

Side hustles, freelance projects, or juggling a few different types of work, it’s more common than ever to earn money from more than one place. But as soon as your income comes from different sources, the tax side can feel a bit messy. The good news? Once you know the basics, managing it becomes much easier.

In this post, we walk through how tax works when you’ve got multiple income streams and what you need to do, to keep everything running smoothly.

If you’re earning money from more than one income source, even if it’s small amounts, HMRC may view each one as separate taxable income. This could include things like:

• freelancing or consulting alongside your main job

• selling products or services online

• renting out a room or property

• driving or delivering through an app

• creating content, earning tips, royalties, or content creation income

• running a small business on the side.

Basically, if it brings in money, and it isn’t fully taxed through PAYE, HMRC will want to know about it.

Do you need register for Self Assessment? You’ll need to register if:

• you earn more than £1,000 from self-employment or side-hustle activity in a tax year

• you already complete a Self Assessment return and now have extra income to add

• you’re a company director or fall under other HMRC criteria. 

If you’re employed and pay tax through PAYE, this only covers your main job. Any extra income over the allowance must still be reported separately.

Registering is straightforward, but timing matters. You need to register by 5 October following the end of the tax year when you first started earning additional income.

Here’s how to do it:

1. Create a Government Gateway account 
   If you don’t have one already, HMRC will guide you through setting this up.
2. Register for Self Assessment 
   • HMRC will ask what type of income you’re reporting — for example, self-employed income, property income or other taxable earnings.
3. Wait for your Unique Taxpayer Reference (UTR)
   •  HMRC will post you a 10-digit UTR number. You’ll need this every time you file a return.
4. Activate your account
   • You’ll receive an activation code to complete the setup.

Once registered, you’ll need to file a Self Assessment tax return each year.

When completing your tax return, you’ll need to include all taxable income. This can include:

• profits from freelancing or gigs

• regular online selling income 

• rental income

• income not fully taxed through PAYE

• royalties, content-creation earnings or, tips.

HMRC will calculate how much tax and National Insurance you owe.

Lots of people have more than one side hustle or self-employed activity — for example, you might do freelance graphic design during the week and run a small online shop on the side. That’s totally normal, and HMRC sees this all the time.

How HMRC treats your work depends on how similar the activities are:

• they might count everything as one business if the work is closely linked

• or they may treat them as separate trades if the activities are clearly different.

If HMRC views them as separate, you’ll usually need to keep individual records for each one — things like income, expenses and receipts. But don’t worry, when it comes to tax, what HMRC is really interested in is your overall profit across all your trades after allowable expenses are taken off.

Accurate records make filing your tax return easier and reduce the risk of mistakes. It’s a good idea to keep:

• separate logs for each income source

• invoices, receipts, and contracts

• bank statements showing business-related transactions

• mileage logs if you use your vehicle for work

• screenshots or statements from online sales platforms.

Many people find it helpful to use a dedicated bank account or simple accounting app to keep track of everything.

You’ll pay tax and, in many cases, National Insurance based on your total profit across all income streams.

You may be able to use:

• the Trading Allowance (£1,000)

• the Property Allowance (£1,000).

These can reduce the amount of income you need to pay tax on.

• Put aside money regularly so you’re prepared for your tax bill.

• Use accounting software to track income and expenses.

• Keep receipts and records throughout the year.

• Check deadlines so you don’t miss payments or filing dates. 

• Speak to an accountant if you have more complex income sources.

If you’re unsure about what you need to declare, whether your income counts as a trade, or how to claim expenses, getting support from a tax professional can give you confidence that everything is correct.

• forgetting to declare extra income

• assuming PAYE covers everything

• not keeping receipts or accurate income records

• missing the Self Assessment registration deadline

• waiting until the last minute to file.

• HMRC: Self Assessment and tax return guidance

• professional tax advisers through the Institute of Taxation or the Association of Taxation Technicians. 

Find out more about Self Assessment in our guide.