How the trading allowance works
The trading allowance covers income from self-employment, casual work or occasional services — things like freelance jobs, babysitting, selling things you make, or gig work. If your total gross trading income in a tax year is £1,000 or less, it's tax-free and you don't need to tell HMRC (unless an exception applies).
There's a separate £1,000 property allowance for things like renting out a driveway. You can use both.
If you earn more than £1,000
If your gross trading income is over £1,000, you'll usually need to register for Self Assessment and file a return. You then choose either:
- Deduct the £1,000 allowance from your income (good if your costs are low), or
- Deduct your actual [allowable expenses](/guides/allowable-expenses-self-employed) (better if they're more than £1,000).
You can't do both. For example, £3,000 of income with £200 of costs: using the allowance means you're taxed on £2,000, not £2,800.
Useful tool
Check whether your side income means you need a tax return.
Selling online: platform reporting
Since 2024, online platforms such as marketplaces and gig apps collect and report sellers' income to HMRC under international rules. That doesn't create a new tax — it just means HMRC can see the income.
Decluttering isn't trading
Selling your own unwanted belongings for less than you paid is generally not trading and not taxable as income. Buying things to sell at a profit, or making items to sell, usually is.When you can't use it
- Income from a business partnership.
- Income from your employer or your spouse/civil partner's business.
- Income from a company you or someone connected to you controls.
What to do next
Under £1,000? You probably don't need to do anything. Over £1,000? Register, get your UTR, then start your return on TaxGo — upload your platform statements or a spreadsheet of income and we'll work out the rest.
Worked examples
| Situation | Income | Costs | Best option | Taxable |
|---|---|---|---|---|
| Sells handmade cards online | £800 | £150 | Allowance covers it — nothing to do | £0 |
| Weekend dog walking | £2,400 | £120 | Use the £1,000 allowance | £1,400 |
| Freelance design on the side | £6,000 | £1,800 | Claim actual expenses | £4,200 |
| Food delivery app | £4,500 | £1,600 (vehicle, phone) | Claim actual expenses | £2,900 |
The taxable amount is added to your other income — for example your salary — and taxed at your normal rates. Class 4 National Insurance may also apply if your total self-employed profit is above the threshold.
Keep records anyway
Even if you plan to use the allowance, keep a note of income and costs. If your expenses turn out to be higher than £1,000, you'll want the evidence to claim them.