HMRC has now issued a fresh warning as millions of workers take on side hustles alongside their primary employment.
More than 16 million people across Britain are now earning additional income through side hustles, marking a sharp rise in secondary work as households seek to manage rising living costs.
This represents a 158 per cent increase compared with 2023, when around 6.2 million people were supplementing their main income with extra work.
The data was cited by Patrick Cannon, barrister-at-law, who highlighted the rapid expansion of secondary earning activity across the country.
The tax authority said people earning money through additional work must ensure they comply with tax rules and declare income where required.
Side hustles range widely, from selling items online and renting out spare rooms to freelance work, blogging and home baking.
Research carried out by OddsMonkey found that almost two in five Britons currently earn money on the side.
The study suggests a significant proportion of those earning extra income may not be declaring it to HMRC.
As a result, the tax authority is urging anyone planning to run a side hustle in 2026 to check whether they need to report their earnings.
The rise in side hustles has been linked to ongoing cost-of-living pressures.
Despite wages increasing in some sectors, many households continue to struggle to cover essential costs.
Polling of 2,000 people found that nearly half are worried about being unable to meet their household bills.
Side hustlers have been warned to make sure they’re not missing tax bills
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GETTYMore than a quarter of respondents said they were concerned about keeping up with rent or mortgage payments.
Those who have taken on a side hustle earn an average of £914 per month from their additional work, equating to roughly £210 per week in extra income.
For many, the additional earnings amount to close to £3,000 a year.
The research found people are turning to a wide variety of money-making activities to boost their income.
Selling unwanted clothes and household items online remains the most common side hustle, with around 68 per cent of side hustlers sell second-hand goods through platforms such as Vinted, eBay and Depop.
Side hustlers are using apps like Etsy and Vinted | GETTY
These sellers earn an average of £165 per month from reselling items, with beauty products reported to be the most profitable side hustle on average.
Participants in this category earn around £249 per month.
The research found 34 per cent of people with side hustles do not report their earnings to HMRC, who clarified that people simply selling personal items from their home do not usually need to take action.
HMRC have urged people to fully understand their tax obligations
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GETTYHowever, anyone earning more than £1,000 a year from selling goods or services may need to declare the income.
Single sales of personal items worth more than £6,000 could also be subject to capital gains tax.
People who need to report earnings may be required to register for Self Assessment as a sole trader.
HMRC has warned that failing to declare income could result in unexpected tax bills or penalties.