Side hustling first-time buyers risking tax penalties or derailed mortgage applications

Over 60% of first-time buyers are relying on secondary income streams and side hustles to achieve homeownership, according to new survey data by Mojo Mortgages. 

However, thousands of side-hustling buyers face unexpected HMRC tax penalties or derailed mortgage applications if they miss the 5th October Self Assessment registration deadline.

A majority of prospective buyers (64%) report using secondary income sources such as selling second-hand goods on platforms like Vinted or eBay, freelance work, delivery driving, or online tutoring to build their deposit.

For most, this extra work is essential. 53% of buyers said their side hustle reduced their deposit saving time by 2 to 3 years and 72% reported cutting between 2 and 5 years off their timeline to buy a home.

Younger buyers are driving the trend, with 72% of 18-to-24-year-olds currently running a side hustle specifically to fund a property deposit or long-term savings.

While side hustling is accelerating property ownership, it also introduces a financial regulatory hurdle. Under UK tax rules, anyone who earned more than £1,000 gross income from self-employment or trading between 6th April 2025 and 5th April 2026 must register for Self Assessment with HMRC by today.

Failing to register by the deadline can trigger automatic penalties, interest on unpaid tax, and potential issues when proving income to mortgage lenders.

Beyond avoiding tax penalties, legal compliance is crucial for buyers seeking mortgage approval. Lenders typically require official proof of extra earnings, such as an SA302 form or Tax Year Overview, before counting side hustle income toward a borrowing limit.

Unreported side hustle income cannot be used to boost loan eligibility, meaning buyers who fail to declare earnings could also see their borrowing power reduced.