Enter your trading details to find out what you need to do and whether the allowance or actual expenses is better for you.
The trading allowance is a tax-free amount of £1,000 per tax year introduced by HMRC in April 2017. It allows individuals to earn up to £1,000 from self-employment, casual trading, or providing services without needing to pay income tax or National Insurance on that income — and without needing to register for self-assessment.
The allowance is designed to make it easier for people with small side incomes — from selling items online, doing occasional freelance work, or odd jobs — to stay tax-compliant without complex record-keeping.
The trading allowance is available to individuals — including employees who also have self-employment income — who receive income from trading, providing services, or casual work. It applies across a wide range of activities:
If your total gross trading income (before any expenses) for the tax year is £1,000 or less, the trading allowance applies automatically. You do not need to:
The £1,000 threshold applies to your gross income (total receipts), not your profit. Even if your costs are zero and it is all profit, as long as total income is under £1,000, you are covered.
If your gross trading income exceeds £1,000 in a tax year, you must register for self-assessment and complete a tax return. Once registered, you then have a choice of how to calculate your taxable profit:
You deduct the flat £1,000 allowance from your gross income. The remainder is your taxable profit. This is simpler and requires no receipts. Good if your actual expenses are less than £1,000.
Example: Income £3,500 — Allowance £1,000 = Taxable profit £2,500. Tax at 20% = £500.
You deduct your real, evidenced business costs. This is better if your actual expenses exceed £1,000. Requires record-keeping and receipts.
Example: Income £3,500 — Actual expenses £1,800 = Taxable profit £1,700. Tax at 20% = £340.
The trading allowance (Option A) is better when:
Actual expenses (Option B) are better when:
Online selling has become a significant source of income for millions of UK households. HMRC has tightened reporting requirements for digital platforms, which now share seller data with tax authorities — so it is more important than ever to understand your obligations.
The distinction between selling your own personal possessions (not taxable as trading income) and running a trading business is crucial:
Under new regulations, platforms including eBay, Etsy, Vinted, Airbnb, Uber, and Deliveroo must collect and report information about UK sellers to HMRC. If you receive more than 30 transactions or £1,500 in total payments through a platform in a year, HMRC will automatically receive your seller data. This does not mean you owe tax — it means HMRC can cross-reference against any tax returns you file.
Workers on gig economy platforms — including Uber, Deliveroo, Just Eat, TaskRabbit, and Bark.com — are treated as self-employed by HMRC in most cases. The trading allowance applies to their income, but the vast majority earn well over £1,000 and must therefore register for self-assessment.
HMRC provides two separate £1,000 allowances that operate independently:
You can use both allowances in the same tax year, giving you up to £2,000 tax-free income from these combined sources. They do not interact with your personal allowance of £12,570 — that is a separate and additional relief.
The property income allowance is different from the rent-a-room scheme (which gives a £7,500 exemption for renting a furnished room in your main home). You can only use one or the other for qualifying property income — whichever is more beneficial.
The trading allowance is £1,000 per tax year that you can earn from self-employment, casual trading, or providing services without paying income tax or National Insurance. If your total trading income is £1,000 or less in a tax year, you do not need to declare it or register for self-assessment. It was introduced by HMRC in April 2017 to simplify tax for people with small side incomes.
No. If your total trading income from all sources is £1,000 or less in a tax year, the trading allowance covers it automatically. You do not need to register for self-assessment, declare it to HMRC, or pay any tax. Remember the threshold applies to your total gross receipts across all trading activities combined — not each source individually.
Yes, if you are engaged in trading (buying to sell, or making items to sell, or providing services), the trading allowance applies. If your total receipts are under £1,000, no tax is due. However, selling personal possessions you no longer need is not trading income — it may be subject to capital gains tax if the item sold for over £6,000, but is not counted against the £1,000 trading allowance threshold.
No. You must choose one approach. If you use the trading allowance, you deduct £1,000 from your gross income to arrive at taxable profit. If you use actual expenses, you deduct your real, evidenced business costs. You cannot combine both methods. You can switch between methods year by year depending on which gives a better result, but within any single tax year you must use one or the other.
Yes, the trading allowance applies to all self-employed income including gig economy platforms. However, most full-time or regular gig workers earn significantly more than £1,000 per year, so they must register for self-assessment. Once registered, they can then choose to use the £1,000 allowance instead of actual expenses — but for most gig workers with vehicle costs, fuel, and insurance, actual expenses will produce a lower tax bill than using the allowance.
Yes. The trading allowance (£1,000) and the property income allowance (£1,000) are completely separate and can both be used in the same tax year. If you have £900 from a side hustle and £800 from renting your driveway, both are covered by the respective allowances and neither is taxable. This gives you effectively £2,000 of tax-free income from these combined sources on top of your £12,570 personal allowance.
If you use actual expenses and your real costs exceed your income (a trading loss), you may be able to carry the loss forward to set against future profits, or sideways against other income in the same year. However, if you use the trading allowance (the £1,000 flat deduction), you cannot create or claim a trading loss — the minimum taxable profit is zero. If your business regularly makes losses, actual expense accounting is essential.