Answers · UK 2025/26
What is the UK Trading Allowance?
The Trading Allowance lets you earn up to £1,000/year from self-employment, casual services, hobby income or eBay-style selling without paying tax or registering with HMRC. Above £1,000 you must register for Self Assessment, but can deduct £1,000 from total trading income.
Full answer
UK Trading Allowance — a £1,000 tax-free threshold for casual or supplementary self-employment income. Applies to: hobby income (selling crafts, eBay flips), freelance one-off jobs, gig work, content creator income, dog-walking, tutoring etc. Below £1,000 gross: no tax to pay, no Self Assessment needed, no HMRC registration required. Above £1,000: two options. (1) Method A — claim £1,000 trading allowance, pay tax on (gross trading income − £1,000) and no other expenses. (2) Method B — deduct actual allowable business expenses (no trading allowance), like a standard sole trader. Choose whichever gives lower tax. The Trading Allowance also applies to "miscellaneous income" outside formal trading (e.g. casual royalties). Separate from the £1,000 Property Allowance (for letting income). Cannot be claimed by partners in a business partnership. Cannot be used alongside Rent a Room. Useful exemption from Self Assessment for very small side incomes. From April 2026 onwards there are plans to raise this to £3,000 alongside Making Tax Digital changes — confirm before relying on the higher figure.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.