The £1,000 trading allowance, explained simply
If you earn a little on the side, this is the number that decides whether HMRC needs to hear from you.
The trading allowance is a £1,000 freebie
Each tax year, you can earn up to £1,000 from self-employment or a side hustle without registering or paying tax on it. It exists precisely so small, casual earners don't have to file.
Over £1,000 means a tax return, not necessarily a bill
Crossing the line means registering for Self Assessment. You can still deduct the £1,000 as a flat allowance instead of expenses - handy if your costs are low.
Work out which side of the line you're on
Add it up honestly. Gross income, not profit, is what counts against the £1,000.
- ✓Total your side income for the tax year (6 April–5 April)
- ✓If under £1,000, keep records but relax
- ✓If over, register for Self Assessment by 5 October after the tax year
Annual trading allowance - tax-free side income before you must register
Source: Trading and Property Allowances - gov.uk
No - VAT registration is a separate, much higher threshold for turnover. This £1,000 allowance is about income tax.
Self-taught marketer who started selling online at 17 and went on to freelance for brands across Europe before founding Adlarion. He writes The Small Business Digest in plain English - the news he wishes he'd had when he was starting out.
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