Trading allowance trebled
If you earn money from a hobby or 'side hustle' you can generally earn up to £1,000 per tax year without paying any tax. This is known as the trading allowance.
The Chancellor has announced a trebling of the trading allowance to £3,000 from 6 April 2027.
Where an individual generates income from freelance activities, casual services or small-scale trading, the trading allowance can be used to offset that income, reducing the taxable profit. For example, if you make £3,500 per year from your dog-walking business in 2027-28, you can choose to deduct the £3,000 trading allowance, leaving you with £500 of profit to pay tax on.
You can either use the trading allowance or deduct your actual business expenses, not both.
The £3,000 allowance is shared across all your qualifying trading and miscellaneous income; it is not available separately for each activity.
The Self Assessment reporting threshold for trading income will also increase from £1,000 to £3,000 from 6 April 2027. This ensures that where the allowance covers all relevant trading income, individuals will no longer have to declare that income or pay tax on it.
You may still be required to submit a Self Assessment tax return for another reason.
