What is the UK Trading Allowance and How Does It Work?

The trading allowance can exempt up to £1,000 of eligible annual trading income. Start with gross receipts before expenses, not profit. It is one allowance across your eligible activities, not £1,000 for every platform or side hustle. Eligibility and reporting exceptions matter.

A decision guide for side income

Your question	Next step
Is this trading, or selling personal belongings?	Establish the nature of the activity before treating every sale as business revenue.
Can I use the allowance?	Check exclusions before applying the £1,000 figure.
Is eligible gross trading income £1,000 or less?	You may not need to report it, but check exceptions and keep records.
Is gross trading income above £1,000?	Check Self Assessment requirements and compare the allowance with allowable expenses.
Do I have several activities?	Bring the relevant receipts together before checking the threshold.

Use HMRC's trading-allowance guidance for eligibility. Partnership trading income is excluded. Restrictions also cover income from your employer, your spouse or civil partner's employer, and certain connected companies or partnerships. Below-threshold income does not remove every reporting obligation; loss relief, voluntary contributions and particular benefit claims can require registration.

Gross income is different from the amount paid into your bank

An illustrative platform sale of £200 with a £20 commission leaves a £180 payout. Do not assume the £180 payout is the relevant gross sales figure. Keep the customer payment and the fee as separate records so that you can apply the correct accounting treatment.

For £800 from tutoring and £600 from another eligible activity, combined gross receipts are £1,400. Splitting them between accounts does not create two allowances.

Allowance or expenses: which gives the lower profit?

You cannot deduct the trading allowance and the actual expenses against the same income. Compare the calculations before choosing. The following examples assume eligibility, no other adjustments and genuinely allowable expenses; they calculate profit, not a final tax bill.

Annual gross receipts	Allowable expenses	Profit using expenses	Profit using £1,000 allowance	Lower-profit option
£4,500	£400	£4,100	£3,500	Allowance
£4,500	£1,500	£3,000	£3,500	Expenses
£2,300	£150	£2,150	£1,300	Allowance
£8,000	£2,100	£5,900	£7,000	Expenses

In the first row the profit difference is £600. If that entire difference were taxed at 20%, the income-tax difference would be £120. Your actual result depends on other income, reliefs and applicable tax rates. National Insurance and benefit calculations need their own checks. The allowance cannot create a loss.

If allowable expenses exceed receipts, investigate the expenses and loss-relief rules rather than assuming an allowance is best. See HMRC's self-employed expenses guide for categories and restrictions.

What if I am selling on Vinted, eBay or another platform?

Selling unwanted personal belongings is not automatically trading. Buying items with the intention of reselling at a profit is a different fact pattern. A platform's reporting threshold is not your personal tax-free allowance. Use HMRC's online selling guidance to assess your activity.

What records and deadlines should I check?

Keep records even when an allowance means no tax is due. A useful working file records the date, activity, gross receipt, fees, refund and supporting document. Do not send customer names, bank statements or income records to RichQuid.

For 2026/27, the tax year runs from 6 April 2026 to 5 April 2027. If you need to register, the usual notification deadline is 5 October 2027, with the usual online return and balancing-payment deadline of 31 January 2028. Check Self Assessment deadlines, particularly if HMRC issues a notice or you already file returns.

Does my salary use up the trading allowance?

Salary is not trading income, but your employment income affects the tax rate on any taxable trading profit. The Self Assessment estimator can help with a supported planning scenario after you have worked out the profit figure; it does not decide your allowance eligibility or filing obligations.

Your next step

Gather your receipts, check exclusions, calculate both deduction options and record why you chose one. Read the side-hustle guide for related questions, then use the linked HMRC guidance for the actual reporting requirements.

Reviewed 18 September 2026. This revision corrects the earlier inclusion of partnership income and the suggestion that below-threshold income requires no records.