The short version: The Trading Allowance lets you earn up to £1,000 from self employment or casual trading without paying tax on it. Below that amount, you don’t even need to tell HMRC.
How does it work?
If your self employment income is under £1,000, it’s completely tax-free. No registration, no tax return, nothing to do.
If you earn more than £1,000 but your actual expenses are low, you can deduct the £1,000 allowance instead of tracking every receipt. This keeps things simple.
When wouldn’t you use it?
If your actual expenses are more than £1,000, claiming them gives you a bigger deduction. You can choose whichever method suits you better.
What counts as trading income?
Selling things you’ve made, freelance work, gig economy earnings, casual services. It doesn’t cover employment income or certain other types of earnings.
Got a small side income and wondering about tax? Ask us whether you need to do anything.
