UK side hustle glossary

A

Allowable Expensetax: An expense that is 'wholly and exclusively' for business use — reduces your taxable profit.
AIAtax: 100% tax relief on qualifying capital expenditure up to £1m in a tax year. Vans, kit, computers — all in.
Accruals Basistax: Record income when you invoice and expenses when incurred, regardless of cash movement. Required for Ltd companies.
Annual Exempt Amounttax: £3,000 of capital gains per year tax-free (2024/25 onwards). Was £12,300 before April 2023.

B

BADRtax: Formerly Entrepreneurs' Relief. Pay 10% Capital Gains Tax (rising to 14% Apr 2025) when you sell a qualifying business, up to £1m lifetime.
BIKtax: A non-cash benefit (e.g. company car, private health) that's taxable to the recipient.

C

Companies Houselegal: Where Ltd companies are incorporated and where you file annual accounts and confirmation statements.
Corporation Taxtax: 19% under £50k profit, 25% above £250k, tapered in between. Due 9 months and 1 day after your accounting period ends.
CT600tax: The annual tax return a limited company files with HMRC. Due 12 months after your accounting period; tax is due 9 months and 1 day after.
Confirmation Statementlegal: A snapshot of your Ltd's directors, shareholders, registered office. Due once a year, £34 online. Missing it can strike off your company.
Capital Allowancestax: Deduct the cost of equipment, vehicles and machinery from your profits. The Annual Investment Allowance lets you write off up to £1m/yr.
Cash Basistax: Record income when you receive it and expenses when you pay them. Default for sole traders under £150k turnover.
Class 2 NItax: £3.45/week as of 2024/25 — abolished as a requirement but available voluntarily to protect your state pension entitlement.
Class 4 NItax: Sole trader NI: 6% on profits between £12,570 and £50,270, 2% above. Paid via Self Assessment.
Companies House WebFilinglegal: The portal for filing accounts, confirmation statements and changes to directors/PSCs.
Companies House Authentication Codelegal: Sent by post when you incorporate. Without it, you can't WebFile. Request a new one via gov.uk if lost.
CGTtax: Tax on profit when you sell or dispose of an asset (shares, property, business). 10% / 20% rates depending on band.

D

Dividendsmoney: Paid from post-tax profits to shareholders. First £500 tax-free (2025/26), then taxed at 8.75%/33.75%/39.35%.
Director's Loanmoney: Borrowing from your own company. If unpaid 9 months after year-end, the company pays 33.75% tax on the balance (refundable when repaid).

E

EORIops: The number you need to move goods between the UK and EU. Apply free via gov.uk.

F

Flat Rate Schemetax: Pay a fixed % of gross turnover to HMRC instead of tracking input VAT. Eligible if turnover under £150k.

G

Government Gateway IDtax: 12-digit ID + password to access Self Assessment, VAT, PAYE and Corporation Tax online services.
Gift Aidtax: Charities reclaim 25p per £1 you donate; higher-rate taxpayers can claim the difference on Self Assessment.

I

IR35legal: HMRC rules to decide if a contractor is really a disguised employee. Critical when hiring or being hired by larger clients.
ISAmoney: Tax-free savings/investment wrapper. £20k/year allowance. Doesn't affect your trading allowance or self-employment tax.

L

Limited Companylegal: Incorporated at Companies House. Profits are taxed via Corporation Tax (19–25%); you pay yourself in salary + dividends.
Late Payment Actlegal: B2B clients owe you 8% + Bank of England base rate, plus a fixed compensation fee, if they pay late.
Limited Liability Partnershiplegal: A hybrid between partnership and Ltd company. Partners file Self Assessment but the LLP has separate legal personality.

M

MTDtax: HMRC's rule requiring digital record keeping and quarterly updates. Mandatory for sole traders earning >£50k from April 2026.
Money Claim Onlinemoney: The UK government service for chasing unpaid invoices under £10,000. Fees from £35.
MOSStax: Former EU VAT scheme for digital services. Now replaced for UK by the Non-Union OSS for EU-based sales.

N

NICtax: Class 2 (£3.45/wk, scrapped from Apr 2024 unless voluntary) and Class 4 (6% between £12,570–£50,270, 2% above) for the self-employed.

P

Personal Allowancetax: The amount you can earn (combined PAYE + self-employed) before income tax kicks in.
PAYEtax: How employers deduct income tax and NI from salaries. Required if you employ anyone or pay yourself a salary from your Ltd.
Payment on Accounttax: Two installments (Jan & Jul) toward next year's bill, each 50% of last year's tax. Catches first-time filers off guard.
PSClegal: Anyone who owns more than 25% of a company or otherwise controls it. Must be registered at Companies House.
Pre-trading expensestax: Allowable expenses you racked up in the 7 years before your first sale can be claimed in your first tax year.
P11Dtax: Annual HMRC form listing benefits given to directors/employees (private health, company car). Due 6 July.

S

Sole Traderlegal: You and the business are legally the same entity. Simplest setup but you have unlimited personal liability.
Self Assessmenttax: Filed online by 31 January following the tax year end (5 April). £100 instant penalty for late filing.
SIC Codelegal: A 5-digit code describing what your company does. Pick at incorporation; you can add/change at any time.
S455 Taxtax: The 33.75% temporary tax HMRC charges on director's loans not repaid within 9 months of the accounting period end.
Salary Sacrificemoney: Reduce your gross salary in exchange for non-cash benefits (pension, EV, cycle) — saves NI and income tax.
SEISStax: Historical Covid grant scheme. Grants are taxable and must be declared on your Self Assessment.
Statutory Sick Payops: £116.75/week for up to 28 weeks when an employee is too ill to work. Funded by the employer.
Statutory Maternity Payops: 90% of average weekly earnings for 6 weeks, then £184.03/week for 33 weeks. Reclaimable from HMRC by small employers.

T

Trading Allowancetax: The first £1,000 of self-employed income each tax year is tax-free. No need to register or file unless you exceed it.

U

UTRtax: A 10-digit number HMRC issues when you register for Self Assessment. You'll need it every time you file a return.

V

VATtax: A 20% sales tax. You must register once turnover exceeds £90k in any rolling 12-month period.