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
Common questions
Is this the same as the VAT threshold?
No - VAT registration is a separate, much higher threshold for turnover. This £1,000 allowance is about income tax.
Does it apply per business or per person?
Per person, across all your casual self-employed income - not per side hustle.
What records should I keep?
Dates, amounts and what for. A simple spreadsheet is plenty under the threshold.
Luca Bonura started selling online at 17 and funded his first business with 4:30am shifts in a bakery. He built his own product brand, watched it fail, and rebuilt as a freelance performance marketer for everyone from small shops to HelloFresh. Seeing how hard growth is even for people inside the industry, he founded Adlarion. He writes The Small Business Digest in plain English: the news he wished he'd had when starting out.
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