What the trading allowance is
The first £1,000 of trading income in a tax year is tax-free. If your income from selling (before costs) is £1,000 or less, you do not need to tell HMRC about it at all.
Free comparison
Trading allowance vs actual expenses
UK sole traders can take £1,000 off their income with the trading allowance, or claim their actual expenses, but not both. See which leaves you less tax to pay.
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Use the trading allowance
That saves you about £91.00 in tax.
| Trading allowance | Actual expenses | |
|---|---|---|
| Taken off your income | £1,000.00 | £650.00 |
| Taxable profit | £3,200.00 | £3,550.00 |
| Tax at 26% | £832.00 | £923.00 |
Rates for 2026/27 from gov.uk. A rough guide, not tax advice. gov.uk
Guide
Allowance or expenses: how to choose
When your income is over £1,000
You choose: take £1,000 off your income as the allowance, or take off your actual expenses: the stock you sold, fees, postage, packaging, mileage and other costs. You cannot do both.
The simple rule
If your actual expenses are under £1,000, the allowance usually wins. Above £1,000, your actual expenses win. For resellers, the cost of the stock you sold alone often goes over £1,000.
Losses need actual expenses
If your costs are more than your income, only claiming actual expenses lets you record the loss. The allowance cannot create one.
How ProfitClerk works this out for you
- The tax centre: forms, set-aside, deadlinesProfitClerk's tax centre fills your country's tax forms from your eBay sales and shows tax to put aside, thresholds, deadlines and tax-year exports.
- Record your business expenses and receiptsTrack eBay seller expenses in ProfitClerk: categories, receipt photos, business-use share, VAT or GST you reclaim, search, missing receipts and a CSV export.
- Your profit and loss statement, line by lineRead ProfitClerk's profit and loss for eBay sellers: net sales, every cost line, cash or accrual basis, tax year periods and a CSV export for your return.
Questions
Do I need to tell HMRC if I earn under £1,000?
Not if your total trading income (before expenses) from all your side hustles is £1,000 or less in the tax year and you have no other reason to file a Self Assessment return.
Is the £1,000 per side hustle?
No, it covers all your trading income together. There is a separate £1,000 allowance for property income.
Can I use the trading allowance and claim expenses?
No. You either deduct the £1,000 allowance or your actual allowable expenses, whichever you choose for that tax year.
Is the threshold going up to £3,000?
The government has said the income level at which you must file a Self Assessment return for trading income will rise to £3,000, but the £1,000 allowance itself is not changing. Check gov.uk for when it applies.
Know your real expenses
ProfitClerk records every fee, postage label, stock purchase, expense and mile, so your actual expenses are one click away when you decide.
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