The £1,000 trading allowance and side-hustle tax
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In short. The trading allowance lets UK residents earn up to £1,000 of gross trading or miscellaneous income each tax year without telling HMRC. Above £1,000, a Self Assessment return is required and the £1,000 can be claimed as an alternative to actual expenses. A separate £1,000 property allowance works the same way for rental income.
Since January 2024, UK online platforms (eBay, Vinted, Etsy, Airbnb, Uber, Deliveroo and similar) report seller activity to HMRC under OECD model rules. The trading allowance is the threshold most casual sellers will be measured against.
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What the trading allowance covers
- Self-employed/sole trader trading income (e.g. freelance work, crafts, repairs)
- Casual or miscellaneous income (e.g. online sales of items bought to resell)
- Gig-economy platform earnings (Uber, Deliveroo, TaskRabbit, etc.)
- It does NOT cover income from a limited company, partnership share or property
Selling personal items is not 'trading'
HMRC distinguish between selling personal possessions (not trading, no income tax) and buying or making things with the intention of selling them at a profit (trading, taxable). The 'badges of trade' include frequency, profit motive, and modification of items before sale. Clearing out a wardrobe on Vinted is not trading; buying clothes wholesale to resell is.
Capital Gains Tax can still apply when selling a single personal possession ('chattel') for more than £6,000.
Digital platform reporting from 2024
UK platforms must collect and report seller information to HMRC where a seller makes 30+ sales of goods in a calendar year or earns over roughly €2,000 (about £1,700). Reports cover the seller's identity, sales totals and fees. HMRC use these to identify undeclared income. The reporting threshold is not the tax threshold — the £1,000 trading allowance is.
FAQ
- If I sell £900 of crafts, do I need to register?
- No — gross income under £1,000 in the tax year falls within the trading allowance and does not have to be declared.
- Can I claim the £1,000 and my actual expenses?
- No — you can claim the £1,000 trading allowance OR actual allowable expenses, whichever gives the lower taxable profit. Higher-expense businesses are usually better off claiming actual expenses.
- Does HMRC see my Vinted sales?
- From 1 January 2024 onwards, UK platforms above the OECD threshold share seller data with HMRC. That does not change the £1,000 trading allowance, but it does mean HMRC can match reported income against tax returns.