How does the GBP 1,000 trading allowance work for online sellers in the UK?

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The GBP 1,000 Trading Allowance Explained The trading allowance was introduced in 2017/18 and gives individuals up to GBP 1,000 of gross trading, casual, or miscellaneous income each tax year completely free of income tax and National Insurance. It applies in 2026/27 and is not linked to inflation -- it remains fixed at GBP 1,000. Who It Applies To The allowance is relevant to: - Online marketplace sellers (Vinted, eBay, Etsy, Depop, Amazon) - Gig workers with modest earnings (odd jobs, car boot sales) - Individuals selling handmade crafts or second-hand goods - Anyone with casual income that does not come from employment or property Note: the allowance is separate from the GBP 1,000 property allowance. You can claim both if you have qualifying income in both categories. Below GBP 1,000 Gross If your total gross trading income across all platforms and activities is GBP 1,000 or less, you have no UK tax to pay on it. You do not need to register for Self Assessment solely because of this income, and you do not need to report it on a tax return (unless you need to file for other reasons). Above GBP 1,000 Gross: Two Options If gross income exceeds GBP 1,000 you must register for Self Assessment and choose one of two approaches: Option 1 -- Deduct the GBP 1,000 allowance: Subtract GBP 1,000 from gross income and pay tax on the remainder. No other expenses can be deducted if you use this option. Option 2 -- Deduct actual expenses: Calculate your profit in the normal way (gross income minus allowable business expenses) and pay tax on the net profit. This is better if your actual expenses exceed GBP 1,000. You choose whichever option gives you the lower taxable profit -- HMRC does not require you to always use the allowance. Reselling vs. Trading HMRC distinguishes between occasional selling of personal possessions (not trading) and running a business. Selling your own unwanted items is unlikely to count as trading. However, regularly buying goods to resell for profit is trading. The DAC7 reporting regime (platforms sharing seller data with HMRC from 2024) means HMRC has greater visibility of platform income, making accurate reporting important. Tax on Profits Above GBP 1,000 Profits above the allowance are taxed at standard income tax rates: 20% basic, 40% higher, 45% additional rate (2026/27). Class 4 NI (6% on profits GBP 12,570--GBP 50,270; 2% above) also applies once profits exceed the small profits threshold.

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• Do online marketplace sellers on Vinted, Etsy or eBay need to register for Self Assessment?