Trading Allowance Increasing to £3,000 from April 2027

Trading Allowance to increase to £3,000 from April 2027

If you make a little extra money from selling goods, providing services or other trading activities, changes announced as part of the Autumn Budget could mean a smaller tax bill and less paperwork.

From 6 April 2027, the Trading Allowance is set to increase from £1,000 to £3,000, helping people with relatively modest levels of trading or miscellaneous income.

What is the Trading Allowance?

The Trading Allowance allows individuals to receive a certain amount of qualifying trading or miscellaneous income without paying tax on it, subject to the relevant conditions.

From 6 April 2027, if your total relevant income is no more than £3,000, the increased allowance could mean that you have no tax to pay on that income and do not need to report it to HMRC.

This could be particularly helpful for people earning additional income alongside their main job or other sources of income.

What if you earn more than £3,000?

The Trading Allowance can still be useful if your relevant income exceeds £3,000.

Depending on your circumstances, you may be able to deduct the £3,000 allowance from your income rather than deducting your actual allowable business expenses.

You cannot, however, claim both the Trading Allowance and actual expenses against the same income. So, if you have significant business costs, simply choosing the allowance may not produce the best tax result.

This is where doing the sums, or getting some advice, can make a real difference.

Self Assessment reporting is changing too

Alongside the larger Trading Allowance, the Government plans to increase the trading income reporting threshold for Self Assessment to £3,000 from 6 April 2027.

As a result, some people with relatively small amounts of trading income may no longer need to complete a Self Assessment tax return solely to report that income.

It is important to remember that you may still need to complete a tax return for other reasons, so don't assume the new threshold automatically takes you out of Self Assessment.

Could you benefit?

Our Personal Tax team can help you understand what you need to declare, whether claiming the Trading Allowance or actual business expenses makes more sense, and whether you still need to complete a Self Assessment tax return. Call us now on 01380 723692 or email here.