Start your return for free — you only pay when you're ready to submit. SubmitFox submits directly to HMRC.
Start filing →The trading allowance is one of the most important — and most misunderstood — rules in UK personal tax. If you earn any money outside of your main job, this number determines whether you need to do anything at all.
Measured on GROSS income across all self-employed activities — not profit, and not per activity.
What Is the Trading Allowance?
HMRC gives every UK taxpayer a £1,000 trading allowance per tax year. It covers any self-employed, casual, or miscellaneous income — selling things online, freelancing, tutoring, odd jobs, and more.
If your total income from all these activities stays below £1,000 gross in a tax year, you do not need to register for Self Assessment and you do not need to file a return. No action needed at all.
If your income exceeds £1,000, you must register with HMRC and file a Self Assessment return for that year.
What Does the Allowance Cover?
The trading allowance covers income from:
- Selling goods online — Etsy, eBay, Vinted, Depop, Amazon
- Casual freelance or consultancy work
- Tutoring, coaching or teaching
- Gig economy work — Deliveroo, Uber Eats, Amazon Flex
- Renting out tools, equipment, or a parking space
- Handmade crafts, baking, or similar activities
- Dog walking, pet sitting, or gardening
It does not cover:
- Rental income from property (a separate £1,000 property allowance applies)
- Employment income (covered by PAYE)
- Savings interest (covered by the personal savings allowance)
The Allowance Is Per Person, Not Per Activity
This is the part most people get wrong. The £1,000 allowance applies to all your self-employed income combined — not £1,000 per side hustle.
Can I Claim Expenses Instead?
Yes — if your allowable business expenses exceed £1,000, you may be better off claiming actual expenses rather than using the trading allowance. You cannot use both in the same tax year for the same income stream.
For example, if your Etsy income is £3,000 and your costs (materials, postage, fees) are £1,800, your taxable profit is £1,200. Using the trading allowance would give you a deduction of only £1,000 — so claiming actual expenses saves you more.
What Do I Do If I'm Over the Threshold?
Register for Self Assessment
Register with HMRC online by 5 October after the end of the tax year in which you earned the income. You'll receive a UTR number by post.
Gather your records
Total up your income for the tax year (6 April to 5 April). If claiming expenses rather than the allowance, keep receipts and invoices.
File your return by 31 January
Complete your Self Assessment and pay any tax owed by 31 January following the end of the tax year.
Earned over £1,000? File with SubmitFox
Start your return for free — you only pay when you're ready to submit.
SubmitFox submits your Self Assessment directly to HMRC. Most people finish in under 20 minutes.
Common Questions
Yes. The trading allowance applies to self-employed income regardless of whether you also have PAYE employment. Your employment income is taxed separately through your employer.
Yes. The trading allowance is £1,000 per tax year (6 April to 5 April). Each year starts fresh.
Not necessarily. If your income is, say, £1,200 and you use the trading allowance, you only pay tax on £200 — the amount over the threshold. At basic rate that is £40. It is almost always worth registering and filing rather than ignoring it.
Yes. The £1,000 property allowance covers income from renting out property or land. It is separate from the trading allowance. You can use both in the same tax year if you have both types of income.
If your income is under £1,000 and you are using the allowance to avoid filing, you do not need to tell HMRC anything. If you are over £1,000 and filing a return, you simply claim the allowance in your Self Assessment.