Self Assessment · Allowances

The £1,000 trading allowance

The allowance that decides whether your side income needs a tax return at all — and a flat deduction that beats receipts for low-cost businesses.

Two different jobs, one allowance

The trading allowance does two separate things depending on your gross trading income (money in, before any expenses):

Gross income £1,000 or less

Full relief: the income is tax-free and you usually don't need to register for Self Assessment or file a return for it at all. A few hundred pounds of weekend jobs can stay genuinely simple.

Gross income over £1,000

Partial relief: you file as normal, but you can choose to deduct a flat £1,000 instead of your actual expenses. No receipts needed for the £1,000 — but you give up every other expense claim.

Allowance or actual expenses — which wins?

Simple test: do your real expenses exceed £1,000 a year? A jobbing electrician spending thousands on materials, fuel and insurance should never touch the allowance. A tutor, dog-walker or freelance writer with a laptop and not much else often comes out ahead taking the flat £1,000 — it's likely more than their receipts add up to, with zero record-keeping argument.

You choose each year

Unlike the mileage method, this is not a one-way door — you can use actual expenses one year and the allowance the next. Pick whichever is larger each year.

Three traps

1. It's gross income, not profit — £1,200 of sales with £900 of costs is over the threshold and needs a return.2. You can't use the allowance to manufacture a loss — it caps at your income, so there's no loss to carry forward. If you genuinely made a loss, claim actual expenses instead to preserve it.3. Even under £1,000, you may still want to register voluntarily — for example to pay voluntary National Insurance towards your State Pension, or because a mortgage lender wants to see declared income.

See which choice saves you more

Get Sorted tracks your actual expenses automatically, so comparing them against the £1,000 allowance takes one glance instead of a January spreadsheet.

Try Get Sorted free →

HMRC source

gov.uk — Tax-free allowances on property and trading income

Always verify current thresholds and rates directly with HMRC or a qualified accountant.