Do You Need to Declare Side Income to LHDN?

Yes. Income from selling online, freelancing, tutoring, e-hailing, delivery work or renting out a room has to be declared to LHDN, even if you already pay tax on a salary. Declaring doesn't always mean paying: you are taxed on your total chargeable income after expenses and reliefs, and many people with modest side income end up owing little or nothing extra.

Which form: BE or B?

Which form you use depends on whether LHDN treats your side income as business income:

• Form BE is for people without business income. Whether occasional freelance work counts as business income depends on the nature and circumstances of the activity, so there is no simple count of jobs that settles it. For a genuinely one-off job, check LHDN's guidance or ask LHDN.
• Form B is for people with business income. Recurring freelance, gig or online business activity is generally treated as business income and is normally reported on Form B. If you use Form B, you declare your salary on the same form; you don't file both.

LHDN describes the gig economy, such as work through ride-hailing and delivery apps, as business income. If you're unsure which applies to you, LHDN's Hasil Care Line or a licensed tax agent can confirm.

Deadlines and payment

Form B is due by 30 June for manual filing, or 15 July through e-Filing, according to LHDN. Form BE is due earlier, by 30 April (with extra time usually given for e-Filing). Once you have business income, LHDN may also put you on a tax instalment schedule (CP500), so that you pay during the year instead of in one lump sum.

Expenses: the part most people miss

With business income you're taxed on profit, not takings. Allowable expenses are the costs of earning that income, such as stock, packaging, platform fees, delivery costs and equipment used for the business.

Example: Aina, from our tax rates guide, has chargeable income of RM44,500 from her job. On weekends she sells baked goods, taking in RM18,000 a year and spending RM6,000 on ingredients and packaging. Her profit is RM12,000, which lifts her chargeable income to RM56,500.

• Tax on RM44,500: RM1,170
• Tax on RM56,500: RM2,215

So her side business adds about RM1,045 of tax, not the RM1,980 she might fear from applying 11% to the full RM18,000. Without her expense records, she'd pay more.

Two limits to know. Personal spending isn't deductible just because it's paid from the same account; only costs incurred in earning the business income count. And for equipment used in the business, such as a laptop, oven or camera, the cost is generally recovered through capital allowances claimed over time rather than as a single expense. A tax agent can help you get this right in the first year.

LHDN requires you to keep documents, records and business accounts for seven years. A simple spreadsheet of money in and money out, with receipts saved as photos, is a good start.

What about e-invoicing?

Most small sellers and freelancers don't need to issue e-invoices. LHDN's e-Invoice General Guideline version 4.8, issued on 30 August 2026, exempts taxpayers with annual turnover or revenue below RM3 million, up from RM1 million previously. The exemption doesn't apply if a related company, holding company, non-individual shareholder or joint venture has revenue of RM3 million or more. The threshold has changed several times, so check LHDN's latest e-Invoice guidance or the MyInvois portal for the rules that apply to you. Remember: being exempt from e-invoicing does not mean being exempt from declaring income.

What if you haven't declared before?

Not declaring income is an offence under the Income Tax Act, and penalties can be much larger than the tax itself. If you've missed past years, it's usually better to come forward and amend them than to wait for LHDN to find the income. A licensed tax agent can help you do this properly.

Practical steps

1. Register for a tax file number on MyTax if you don't have one.
2. Keep business money separate, ideally in its own bank account.
3. Set aside tax as you earn. Putting 10–15% of each payment aside avoids a shock at filing time.
4. Claim your reliefs. They apply to your total income, side business included. See every personal tax relief for YA 2026.

Irregular income makes budgeting harder. Managing Money on Irregular Income explains how to smooth it out, the Budget Analyzer helps plan your spending, and the Emergency Fund Calculator sizes the bigger buffer freelancers need. For the basics of how tax works, see How Malaysian Income Tax Actually Works and e-Filing Without Fear.

References

• LHDN, HASiL e-Newsletter, Edition 6/2023 (Form B deadlines, records, gig economy)
• LHDN via The Star, Gig Economy On The Rise (Form B vs Form BE)
• LHDN, Individual Tax Rate
• JomEInvoice, LHDN Raises e-Invoice Exemption to RM3 Million (v4.8) (quotes General Guideline v4.8, §1.6.1(e) and §1.6.10)
• VATupdate, Malaysia raises e-Invoice exemption threshold to MYR 3 million (8 September 2026)