Answers · UK 2025/26

Trading allowance £1,000 explained UK

The £1,000 trading allowance lets you earn up to £1,000 of self-employed, casual or miscellaneous income in a tax year without paying tax or filing a return. Above £1,000 you can either deduct actual expenses or simply subtract the £1,000 flat allowance from your gross income — whichever produces the lower taxable profit.

Last updated: 16 May 2026Last reviewed: 16 May 2026How we verify

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Introduced in 2017/18, the trading allowance covers small side income — eBay/Vinted reselling, gig-economy driving, casual freelancing, content creation, tutoring. Gross trading income under £1,000 in a tax year: no tax, no NI, no need to register or file self-assessment (full exemption). Gross income above £1,000: register for self-assessment and choose one of two methods on the return: (a) deduct actual allowable expenses (better if expenses exceed £1,000); (b) deduct the £1,000 flat trading allowance (better for low-expense activity). You cannot use both methods together. Worked example 1: £4,000 turnover with £200 expenses — use the £1,000 allowance to declare £3,000 profit (saves £160 tax vs deducting £200). Example 2: £4,000 turnover with £1,800 expenses — deduct actual expenses to declare £2,200 profit. The trading allowance cannot be used if you trade with your own employer or family company (anti-avoidance). It is separate from the £1,000 property allowance, which works similarly for rental income.