Trading Allowance Calculator UK
Compare the £1,000 allowance with your actual allowable expenses and use the option that produces the lower taxable profit.
Lower taxable profit
Claim the £1,000 trading allowance
Estimated Income Tax
At your 20% marginal rate
Saving vs other method
Income Tax only; NI not included
Using the allowance
£2,000.00
Using actual expenses
£2,600.00
Gross income is the threshold test
HMRC tests the £1,000 threshold against receipts before expenses. Keep income records even when full relief means you do not need to report the income.
Announced at Budget 2026: from 6 April 2027 the trading allowance rises to £3,000, and it will also cover miscellaneous income. The figures above use the £1,000 allowance in force now.
Frequently asked questions
What is the trading allowance?
It is an exemption of up to £1,000 a year for eligible gross income from self-employment, casual services and hiring personal equipment.
Can I claim the trading allowance and expenses?
No. For partial relief, you choose either the trading allowance or actual allowable expenses. You cannot deduct both against the same trading income.
Do I need Self Assessment if I earn more than £1,000?
Gross trading income over £1,000 normally means you must register for Self Assessment, even if expenses reduce the taxable profit below £1,000.
Is the trading allowance going up?
Yes, from 6 April 2027. Budget 2026 announced a rise from £1,000 to £3,000 a year, covering trading and miscellaneous income, to be legislated in Finance Bill 2026-27. Until then the allowance stays £1,000, and this calculator uses it.
When is the trading allowance unavailable?
It does not apply to partnership income, or to certain income from your employer or a company or partnership connected with you. Other exceptions can apply, so check the official HMRC guidance.
Official source
HMRC — Tax-free allowances on property and trading incomeRelated Calculators
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