Trading Allowance Calculator UK 2025/26
Find out if your side income from freelancing, selling online, or casual work is covered by the £1,000 trading allowance — and how much tax you owe above it.
What Is the Trading Allowance?
The trading allowance is a £1,000 tax-free threshold for income from self-employment, casual work, and selling goods or services. Introduced in 2017, it means that if your total gross trading income in a tax year is £1,000 or less, you pay no tax on it and do not need to report it to HMRC. It is particularly useful for people with small side incomes from platforms like Etsy, eBay, Vinted, Deliveroo, or Fiverr.
How the Trading Allowance Works
| Gross Income | What Happens |
|---|---|
| £1,000 or less | Fully tax-free — no Self Assessment needed for this income |
| Over £1,000 | Must register for Self Assessment — choose either method below |
If your gross income exceeds £1,000 you must register for Self Assessment. You then have two options for calculating your taxable profit.
Option A — Use the Trading Allowance
Deduct £1,000 from your gross income. Tax is paid on anything above £1,000. This is simpler and does not require you to track every expense.
Option B — Deduct Actual Expenses
Deduct your actual allowable business expenses from gross income. This gives a better result when your costs exceed £1,000 — for example, if you buy stock to resell on eBay or incur significant materials costs as a freelancer.
National Insurance on Trading Income
Once your trading profit exceeds the Small Profits Threshold (£6,725 in 2025/26), you may also owe Class 4 National Insurance at 6% on profits between £12,570 and £50,270, and 2% above that. Class 2 NI was abolished from April 2024. Use our self-employed tax calculator for a full breakdown including NI.
eBay, Vinted and Online Platform Income
From January 2024, online selling platforms are required to report seller data to HMRC. If you sell on eBay, Vinted, Airbnb, Fiverr, Deliveroo or similar platforms, HMRC may already have data on your income. If your total gross receipts exceed £1,000 in a tax year, you should register for Self Assessment — even if your actual profit is small or zero after expenses.
Selling your own used personal possessions is not generally trading. The allowance becomes relevant when you buy goods specifically to resell them, provide services, or earn money through a platform systematically.
The Property Allowance — A Separate £1,000
The trading allowance is separate from the £1,000 property allowance, which covers income from renting out property or land. You can use both in the same tax year, giving a combined potential tax-free income of £2,000 from two different sources.