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The UK £1,000 trading allowance for side hustles

The UK £1,000 trading allowance for side hustles

Selling crafts online, dog walking or doing odd jobs alongside a job? In the UK, the first £1,000 of trading income each tax year can be tax-free under the trading allowance.

Check official sources. Figures below were checked against the official pages listed at the bottom on 14 October 2026. Budget and Finance Act changes can alter them, so confirm before relying on them.

If your gross trading income is £1,000 or less

You usually don't need to tell HMRC or file a tax return for it ("full relief"). You still need to keep records of the income.

Some people choose to register anyway, for example to claim a loss, pay voluntary Class 2 National Insurance, or claim Tax-Free Childcare or Maternity Allowance based on self-employment.

If it's more than £1,000

You must register for Self Assessment, by 5 October after the end of the tax year. On your return you choose either:

Partial relief: deduct the £1,000 allowance instead of expenses, or
Actual expenses: deduct your real business costs. This is better when your costs are over £1,000.

You can't do both. The allowance can't create a loss.

"Gross" means total income before expenses. Selling £1,500 of items that cost you £1,200 to make is £1,500 gross, which is over the limit.

Who can't use it

You can't use the allowance against income from your own employer (or your spouse's), from a company you or a connected person controls, or from a partnership.

Selling your own unwanted things

Clearing out your wardrobe isn't trading. The allowance and tax rules are aimed at buying to resell or making things to sell. If you're unsure, check HMRC's guidance.

How much tax on profit above that?

Profit is added to your salary. A basic-rate taxpayer pays 20% Income Tax plus Class 4 NI at 6% once total profits pass £12,570, so setting aside 20–26% is a reasonable rule. See UK sole trader tax set-aside.

Records to keep

Invoices, a spreadsheet of income, platform statements, bank statements and an appointments book are all acceptable. HMRC can charge penalties for inaccurate or missing records.

Sources

Figures checked 12–13 October 2026. Rules change, so always confirm with the official source.

Frequently asked questions

Do I pay tax on side hustle income under £1,000?

Usually not. Gross trading income of £1,000 or less in a tax year is normally covered by the trading allowance and doesn't need to be reported, but you must keep records.

What happens if I earn more than £1,000?

You must register for Self Assessment by 5 October after the tax year ends, then either deduct the £1,000 allowance or your actual expenses, whichever is better.

Is the £1,000 limit before or after expenses?

Before. It applies to gross income, the total before any costs.

Not financial advice. These guides are general information for budgeting and planning, not financial, tax, legal or mortgage advice. Rules change and your situation is unique. Check official sources or a qualified adviser before you act.