Hamster blog

PAYE job plus side hustle: how are they taxed together?

By the Hamster team · Published 25 October 2026

Last checked: 25 October 2026 against GOV.UK · Figures are for the 2026–27 tax year unless stated

One Personal Allowance, used by your job first

Everyone gets one Personal Allowance, £12,570 in 2026–27, across all their income. It is not £12,570 for your job and another £12,570 for your side hustle.

Your employer uses it through your tax code. 1257L is the code most people with one job have: it means £12,570 of your pay is tax-free, and the L means you get the standard allowance.

So if your salary is more than £12,570, there is no allowance left for your side hustle. Its profit is taxed from the first pound.

Side hustle profit sits on top of your salary

For Income Tax, your side hustle profit is added to your salary and taxed at whatever rate that total reaches. In England, Wales and Northern Ireland for 2026–27:

• 20% on income from £12,571 to £50,270
• 40% from £50,271 to £125,140
• 45% above £125,140

If your salary is already close to £50,270, part of your profit may be taxed at 40%. And above £100,000 of total income, your Personal Allowance shrinks by £1 for every £2 over. Scotland has its own Income Tax bands.

Profit means your side hustle income minus either your allowable expenses or the £1,000 trading allowance, whichever is bigger.

National Insurance is worked out separately

National Insurance does not stack the same way:

• Class 1 comes off your wages through PAYE: 8% on earnings above £242 a week in 2026–27.
• Class 4 is charged on your self-employed profit on its own: 6% between £12,570 and £50,270 and 2% above.

Because your salary is not added to your profit for Class 4, a side hustle making less than £12,570 profit pays no National Insurance at all. Our National Insurance guide has more.

Worked example 1: close to the higher-rate line

Sophie earns £45,000 as a project coordinator and makes £8,000 profit from wedding photography in 2026–27. Her total income is £53,000.

• £5,270 of her profit fills the rest of the basic-rate band (up to £50,270): £5,270 × 20% = £1,054
• £2,730 is above £50,270: £2,730 × 40% = £1,092
• Income Tax on the side hustle: £2,146
• Class 4: profit under £12,570, so £0

Her tax bill through Self Assessment is £2,146. Her PAYE tax on her salary is (£45,000 − £12,570) × 20% = £6,486, which is about 75% of her total Income Tax of £8,632. Because less than 80% was collected at source and her bill is over £1,000, HMRC will usually ask for payments on account of £1,073 each.

Worked example 2: a part-time job

Ben works part time for £10,000 a year and makes £6,000 profit from gardening. His job only uses £10,000 of his Personal Allowance, so £2,570 is left for his side hustle.

• Taxable: £6,000 − £2,570 = £3,430
• Income Tax: £3,430 × 20% = £686
• Class 4: £0

Ben's bill is under £1,000, so there are no payments on account.

Your tax code and your side hustle

HMRC can change your tax code to take account of untaxed income. GOV.UK lists income you have not paid tax on, such as part-time earnings, as something that can reduce the tax-free amount in your code. If your untaxed income is more than your Personal Allowance, you may see a K code.

You can also choose to pay your Self Assessment bill through your tax code if all three of these apply:

• you owe less than £3,000
• you already pay tax through PAYE, for example as an employee
• you file your online return by 30 December

HMRC then collects it from your pay over the following tax year instead of in one payment on 31 January. Sophie, in the first example, owes too much for this option.

Student loans

If you have a student loan, Self Assessment works out repayments on your combined income: 9% over your plan's threshold for Plans 1, 2, 4 and 5, and 6% for a Postgraduate Loan. It takes off what has already been deducted from your salary.

What your salary does not affect

Some side hustle thresholds ignore your job entirely:

• The £1,000 trading allowance is measured against your side hustle income alone. A salary does not use it up, and having a job does not remove the need to register for Self Assessment once you pass it.
• Making Tax Digital is based on your qualifying income: self-employment and property income before expenses. Wages taxed through PAYE do not count, so someone on £60,000 with a £6,000 side hustle has qualifying income of £6,000.
• Class 4 National Insurance looks at your profit on its own, as above.

Keeping track

The tricky part is that the rate on your side hustle depends on your salary. Hamster is a free Android app where you add your salary once, and it estimates your Income Tax on top of it and Class 4 on your profit alone, every time you log earnings.

This is general information, not personal tax advice. Rules and rates change — check the linked GOV.UK pages or speak to an accountant about your own situation.