The £1,000 Trading Allowance: How to Use It on Your Side Income

The £1,000 trading allowance lets you earn up to £1,000 from self-employment or casual work in a tax year without paying tax or National Insurance, and without needing to complete a Self Assessment return.

What counts?

Selling on eBay or Vinted, freelance work, tutoring, dog walking, crafts — any self-employed or casual income. It does not apply to rental income (that has its own £1,000 property allowance).

Above £1,000

If you earn more than £1,000, you have two options:

• Deduct the flat £1,000 allowance from your gross income, or
• Deduct your actual allowable expenses (better if expenses exceed £1,000)

The catch

You cannot use the trading allowance and claim actual expenses — it's one or the other. If your business expenses are low, the flat allowance is simpler.