Side income and the £1,000 Trading Allowance
Selling online, odd jobs and small ventures often have a £1,000 allowance — but records still matter.
If you make money from a side hustle — eBay flips, crafts, weekend photography, odd jobs — the UK Trading Allowance can let you earn up to £1,000 of trading income without paying tax or declaring it in some cases. Cross that line, or choose to deduct actual expenses instead, and Self Assessment rules may apply. It is separate from your £12,570 Personal Allowance.
Who this guide is for
UK residents earning small amounts from freelancing, selling services, content, crafts or casual trade who need to understand the £1,000 trading allowance.
Not for: People merely selling their own unwanted possessions, or businesses with partnerships, losses, VAT or complex expenses requiring tailored accounting advice.
What counts as trading income
HMRC looks at frequency, profit intent and organisation. Regular sales with a profit motive look like trading; selling a few personal possessions is usually not. Platform “side hustles” often sit on the trading side once they become organised and repeated.
Property income has a different £1,000 property allowance. Do not assume trading and property allowances stack on the same receipts in ways GOV.UK does not allow.
Using the £1,000 allowance
You can ignore trading income of £1,000 or less for Income Tax in many straightforward cases — still keep basic records in case HMRC asks. If you earn £1,000–£1,000+ and claim the allowance, you typically deduct £1,000 instead of actual costs. Sometimes actual expenses are better; run both numbers.
Income above thresholds may require registering for Self Assessment even if tax ultimately due is small once Personal Allowance is applied.
PAYE employees with a hustle
Your day-job tax code does not automatically settle side income. Missed declarations are a common way people build unexpected bills. If interest on business cash builds up outside an ISA, remember the Personal Savings Allowance (£1,000 / £500) is separate again.
National Insurance may also apply to self-employed profits above NI thresholds — Income Tax is not the whole story.
Good habits before you scale
Use a separate account pot, photograph receipts, and note mileage if relevant. If you approach £1,000 mid-year, decide whether to slow down, price in tax, or register promptly. Paying into a pension or ISA with profits is fine — but do not skip emergency cash because “HMRC can wait”. They will not.
Gross receipts, profit and platform reports
The trading allowance is up to £1,000 of gross trading income per tax year, not £1,000 of profit and not a universal exemption for every payment received. Gross means before platform fees, materials, mileage or other expenses. If total relevant gross income is £1,000 or less, full relief can often mean no tax or registration obligation for that income, subject to exceptions.
| 2026/27 side activity | Gross income | Initial question |
|---|---|---|
| Design jobs | £850 | May fall within full allowance |
| Tutoring | £2,400 | Choose actual expenses or £1,000 partial relief |
| Own used furniture sold | £1,300 receipts | May not be trading at all |
When gross trading income exceeds £1,000, compare two methods. With £3,600 receipts and £900 allowable expenses, actual-profit calculation gives £2,700. Electing for £1,000 partial relief gives £2,600, so the allowance is £100 better. If expenses were £1,450, actual profit of £2,150 would be better. You cannot deduct both the £1,000 allowance and actual expenses from the same income.
Platform reporting does not create a new tax merely because data reaches HMRC. The underlying facts still decide whether activity is a trade, a casual receipt or disposal of personal assets. Repeatedly buying stock to resell for profit looks more like trading than clearing old clothes from a wardrobe. Keep evidence of purchase purpose and costs.
- Add gross receipts across all relevant small trades; do not apply £1,000 separately to each app.
- Separate genuine private disposals from profit-seeking activity.
- Keep invoices, platform statements and expense receipts from day one.
- If above £1,000 gross, register and file by the applicable deadlines, then compare allowance with expenses.
- Set aside tax and National Insurance based on estimated profit and other income.
- Check whether turnover approaches VAT registration or whether benefit reporting has separate rules.
A second example: Ollie earns £700 from pet sitting and £650 from photography. Each is below £1,000, but combined gross trading income is £1,350, so he cannot treat both as separately covered. If he has only £120 of expenses, partial relief could leave £350 taxable trading income. His salary may determine the rate applied.
Special restrictions can apply to income from an employer, close company or partnership, and using the allowance can prevent creating a loss. Verify with GOV.UK. This is general information, not accounting or tax advice.
Worked example: weekend repairs
Dee earns £30,000 PAYE and makes £1,450 profit from weekend phone repairs after buying parts. Claiming the Trading Allowance deducts £1,000, leaving £450 taxable. That £450 sits on top of salary still within basic rate, so Income Tax is about £90, before any NI considerations. If parts and tools actually cost £600, Dee compares claiming £1,000 allowance vs £600 expenses — the allowance wins here. Dee registers for Self Assessment because income exceeds the simple £1,000 disregard.
Step-by-step checklist
- Decide whether activity is trading or occasional personal sales
- Track gross income from 6 April onwards
- Compare Trading Allowance vs actual allowable expenses
- Register for Self Assessment if required by HMRC thresholds
- Separate side-income money from everyday spending
- Check NI as well as Income Tax
- Review ISA/PSA plans if cash piles build from the hustle
Common mistakes
- Thinking the £1,000 allowance means you can ignore £5,000 of sales
- Claiming both full expenses and the full Trading Allowance on the same income
- Mixing property lettings into the trading allowance wrongly
- Forgetting that platforms may send data to HMRC
When to get regulated help
Read Trading and Property Allowance guidance on GOV.UK. For starting self-employment checklists, use MoneyHelper. Consider a regulated accountant once profits become material.
Frequently asked questions
Is the Trading Allowance still £1,000?
Yes for standard planning in 2026/27 — confirm on GOV.UK in case of policy changes.
Does the allowance replace Personal Allowance?
No. It sits on top of the usual £12,570 Personal Allowance framework for what becomes taxable income.
What about selling on Vinted or eBay?
Occasional personal clear-outs differ from frequent trading. Frequency and profit intent matter; keep records either way.
Can I use a Lifetime ISA with side-hustle profits?
You can save profits into a LISA if eligible, but that does not remove the need to report taxable trading income correctly.
Is the trading allowance separate from the Personal Allowance?
Yes. The trading allowance can reduce qualifying trading income; the Personal Allowance then applies within the wider income-tax calculation, subject to eligibility.