Side income and the £1,000 trading allowance

You can earn up to £1,000 a tax year in total gross trading income without paying tax on it, and you may not have to tell HMRC. That is the trading allowance. It covers self-employment, casual services such as babysitting or gardening, and hiring out personal equipment. It is measured on gross income, before any costs come off. Go over £1,000 and you must register for Self Assessment.

What the allowance covers

HMRC lists three types of trading income that qualify: self-employment, casual services, and hiring out personal equipment such as power tools. There is also a separate £1,000 property allowance for income from land or property, and if you have both kinds of income you get both allowances. Gross income means the total you would put on your return before allowances or expenses.

Public sector staff often meet this through private tutoring, selling lesson resources, private clinical or therapy sessions, exam marking paid as self-employment, or a weekend market stall. Bank shifts, agency work and supply teaching paid through payroll are different, because they are employment taxed through PAYE. See tax on NHS bank shifts and tax when you have two jobs for those.

If your income is £1,000 or less

If your annual gross trading income is £1,000 or less, you may not need to tell HMRC. This is called full relief, and you do not pay tax on it. There are exceptions, including cases where you cannot use the allowance, or where you must register for Self Assessment for another reason. You must still keep records of the income, such as invoices, a spreadsheet of receipts, bank statements, or an appointments diary.

If your income is over £1,000

You can choose how to work out your profit. You can deduct the allowance of up to £1,000 (but not more than your income) instead of your actual expenses. This is called partial relief. If your real expenses are higher than the allowance, claiming expenses may be better, and HMRC says as much. If you use the allowance you cannot also deduct other expenses or allowances.

If gross income for a tax year is more than £1,000, you must register for Self Assessment by 5 October following the end of that tax year. For 2026/27, which ends on 5 April 2027, that means by 5 October 2027. A return is then due online by 31 January after the tax year, so 31 January 2028 for 2026/27. Late Self Assessment penalties and deadlines explains what happens if you miss them.

HMRC’s guidance also says you must tell it if you have other gross income over £1,000 up to £2,500 (contact HMRC), or over £2,500 (register for Self Assessment). Read the page directly if you are close to those figures.

When you cannot use the allowance

You cannot use the allowance in a tax year if you have trading or property income from a company you or someone connected to you owns or controls, a partnership where you or a connected person is a partner, or your employer or the employer of your spouse or civil partner.

The trading allowance also does not apply to trading income from a partnership.

Reasons to register anyway

You can register voluntarily even if income is under £1,000. HMRC lists reasons: you have made a loss and want to claim relief, you want to pay voluntary Class 2 National Insurance, you want to claim Tax-Free Childcare based on self-employment income, or you want Maternity Allowance based on it. You can still use the allowance in those cases but you must complete a return.

If you have already paid tax through your tax code on casual income and believe you were under the allowance, contact the Income Tax helpline because you may be due a refund.

Effects on other things

If you deduct the allowance instead of actual expenses, your income is reduced for the High Income Child Benefit Charge, student loan repayment and some other calculations. Income for Universal Credit is not affected by the allowances.

For a wider look at when an employee needs a return, see Do employees need to do Self Assessment?. If you are unsure whether what you do counts as trading, HMRC’s helpline can say.