The £1,000 trading allowance explained: side hustle tax made simple
19 October 2026 · 6 min read · Checked against GOV.UK 19 October 2026
What the trading allowance is
The trading allowance lets you earn up to £1,000 a tax year (6 April to 5 April) from small-scale self-employment without paying tax or filling in a tax return. It covers things like selling things you've made or bought to resell, dog walking, tutoring, odd jobs and content creation.
The £1,000 is your income, not your profit. If you sell £1,200 of crafts and spent £500 on materials, you're over the allowance, even though your profit is only £700.
Over £1,000: the allowance or your costs
Once you're over £1,000, you need to register for Self Assessment and report your profit. You can work it out in one of two ways, and you can choose each year:
| Method | Profit is | Best when |
|---|---|---|
| Trading allowance | Income minus £1,000 | Your costs were under £1,000 |
| Actual costs | Income minus your costs | Your costs were over £1,000 |
Example: an Etsy shop with low costs
Example: a reseller with high costs
If your costs are more than your income, using costs gives you a loss, which can sometimes reduce your tax on other income.
Deadlines if you're over £1,000
- Register for Self Assessment by 5 October after the end of the tax year. For the year to 5 April 2026, that was 5 October 2026: if you missed it, register now.
- File online and pay by 31 January. For the year to 5 April 2026, that's 31 January 2027.
Your profit is added to any wages or pension and taxed together. If your total income is under the personal allowance (£12,570), there may be no tax to pay, but you still need to report it.
When you can't use it
You can't use the trading allowance for income from your employer (or your partner's), or from a business partnership. Most people with a side hustle can.
What about the £3,000 threshold?
In 2025 the government said it would raise the point where you need to report trading income to £3,000, with a simpler online service for people between £1,000 and £3,000. The allowance itself stays at £1,000, and no start date has been confirmed. Until it is, the £1,000 rule above applies.
Want to check your own figures? Our online selling tax checker compares the allowance with your costs for you. The official guidance is on GOV.UK (opens in a new tab).