Indietax

Trading Allowance Calculator 2026/27

Updated for the 2026/27tax year · Last updated

If you earn money from a side hustle, freelance work, or selling goods online, the £1,000 trading allowance may mean you owe no tax at all — and have nothing to file. This calculator works out whether your income falls below the threshold, and if it doesn't, which deduction method saves you more tax.

The allowance covers all self-employment and casual trading income combined. Enter your gross receipts (before any costs) and your actual allowable expenses to get an instant comparison.

Gross receipts before any deductions (e.g. eBay sales, freelance fees)

Your actual business costs — only relevant if income exceeds £1,000

Enter your trading income above.

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How this calculator works

HMRC introduced the trading allowance in April 2017 to simplify tax for people with small amounts of self-employment income — side hustles, gig work, and casual trading — without requiring them to register for Self Assessment.

Below £1,000: Your trading income is fully exempt. You don't pay tax, don't pay National Insurance, and don't need to file a return. There is nothing to declare.

Over £1,000 — two options: Once your gross trading income exceeds £1,000, you must register for Self Assessment. At that point you have a choice of how to calculate taxable profit:

  • Trading allowance method: Deduct £1,000 from gross income. Simple, no receipts needed. Taxable profit = gross income − £1,000.
  • Actual expenses method: Deduct your genuine allowable expenses. Taxable profit = gross income − total expenses.

You choose the method that produces the lower taxable profit (and therefore the lower tax bill) — you can change method each year. The calculator shows both figures side by side and recommends the better option.

The partial relief case: When gross income is between £1,000 and roughly £1,500 (depending on expenses), the allowance and expenses often produce similar results. The calculator flags when the difference is small so you can factor in the record-keeping burden — no records are needed if you use the allowance method.

What this calculator does not include: Income tax or National Insurance on the resulting profit — use the Income Tax and National Insurance calculators for those figures once you know your taxable trading profit.

Frequently asked questions

The trading allowance is a tax exemption that lets individuals earn up to £1,000 from self-employment, casual work, or online trading each tax year without paying tax or National Insurance on it. You also don't need to register for Self Assessment or declare the income to HMRC — it simply doesn't count as taxable income. It applies per person, not per business or income stream, so if you have two side hustles the £1,000 covers them combined.
No. If your total gross trading income is £1,000 or less in a tax year, you have no obligation to register for Self Assessment, file a return, or notify HMRC. You can simply keep the money. Once you go over £1,000 — even by £1 — you must register for Self Assessment by 5 October following the end of the tax year in which you exceeded the threshold.
HMRC uses several 'badges of trade' to determine whether an activity is commercial: whether you buy with intent to resell, the frequency of transactions, whether you've modified goods to make them more saleable, and whether the activity is organised like a business. Selling personal possessions occasionally is not a trade. Buying goods specifically to resell for profit regularly is. A hobby that occasionally generates income can become a trade if it grows systematic enough — the allowance covers early-stage activity either way.
Trading income includes: freelance or consultancy fees, selling goods on eBay, Etsy, Vinted, or similar platforms (where you buy to resell, rather than clear your own belongings), income from gig economy platforms like Deliveroo or TaskRabbit, and revenue from a small service business (gardening, tutoring, cleaning). It does not include employment income, property rental income (which has its own £1,000 property allowance), bank interest, dividends, or proceeds from selling investments.
Yes. The trading allowance applies to self-employment income only and is completely separate from your PAYE employment. A full-time employee with a side hustle earning under £1,000 needs to do nothing. If the side hustle earns over £1,000, register for Self Assessment — but your PAYE income and tax are unaffected by the registration itself.
Per person. You get one £1,000 trading allowance per tax year regardless of how many separate activities or income streams you have. So if you earn £600 from tutoring and £500 from selling crafts, your total trading income is £1,100 — which exceeds the allowance and requires registration, even though each stream individually is under £1,000.
No — it's one or the other. If you claim the £1,000 trading allowance, you cannot deduct any actual expenses. If you claim actual expenses, you cannot use the allowance for that tax year. The calculator shows you which approach produces the lower taxable profit so you can make an informed choice. Generally, the allowance wins when your expenses are modest; actual expenses win when costs are high relative to income.
The trading allowance cannot create a loss. If your gross income is £800 and you claim the £1,000 allowance, your taxable profit is simply £0 — not a £200 loss. This differs from claiming actual expenses, which can result in a genuine trading loss that may be carried forward or offset against other income.

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