The £1,000 trading allowance explained

Updated: 14/07/2026 · 5 min read

The trading allowance exempts up to £1,000 a year of GROSS trading income: if your side-gig turnover stays at or under £1,000 in a tax year, you generally do not need to register for Self Assessment or file a return. Above it, you file — and can choose to deduct the £1,000 allowance instead of actual expenses.

How the allowance works

Gross income ≤ £1,000/year: usually no registration, no return
Above £1,000: register and choose — deduct the £1,000 allowance OR actual expenses
It is GROSS income (total takings) that counts, not profit
A separate, twin £1,000 allowance exists for property income

The allowance-or-expenses trap

You cannot combine them: either the £1,000 allowance or actual expenses. Below £1,000 of costs the allowance wins; above it, real expenses (with evidence) win. Which is exactly why receipts are worth keeping even for a “little side thing” — without them you have no choice to make.

When to register despite low income

You want qualifying years for the State Pension (voluntary NI needs registration)
You expect rapid growth — the UTR will be needed anyway
Construction/CIS: unregistered subcontractors lose 30% instead of 20% — registration pays back instantly
You want to record a LOSS (heavy start-up costs) to use later

Document even the small stuff

The £1,000 line sneaks up — a few good months and you are over it. If income and costs are captured digitally from the start, crossing the threshold is a formality rather than a year-end reconstruction.

Every receipt captured, categorised and audit-ready.

Snap a photo or forward the email — Reclaim Day reads the vendor, amounts, VAT and date for you.

Start free

Frequently asked questions

I made £800 on the side — do I file a return?+

Usually not: it is within the trading allowance. Watch the exceptions — if you already file for other reasons, you generally report it anyway.

Is it £1,000 of profit or income?+

Income — gross takings before any costs. £1,200 in with £400 of costs is over the threshold despite £800 profit.

Can I claim expenses and the allowance?+

No — one or the other. Costs under £1,000 → take the allowance; over → claim actual expenses with evidence.

Does the allowance apply alongside a job?+

Yes — PAYE covers the job, and the trading allowance covers up to £1,000 of gross side income.

This guide is general information, not tax advice. Rules and figures change — check gov.uk (HMRC) for current rates, and speak to an accountant about your situation.