Trading Allowance

What is the trading allowance?

This was introduced for the 2017/18 tax year onwards to allow an exemption of trading, casual and/or miscellaneous income of up to £1,000 per tax year.

If your total trading income for the tax year is less than £1,000:

You will have no taxable income for this activity, therefore you will not be required to include the income on a self assessment tax return for that year.

But please be aware that you may choose to declare this for certain means-tested benefits, such as universal credit.

If your income is more than £1,000

It still may be beneficial for you to claim this allowance if your business expenses are less than the allowance amount.

- Eg. If you started selling art prints online and your gross sales in the first tax year total £2,000, then business expenses totalled £500, you would have a taxable profit of £1,500.

But if you opted to claim the allowance instead of your actual expenses, your taxable profit would be £1,000 (£2,000 Gross Sales minus £1,000 trading allowance).

This is known as partial relief.

If you have multiple trades

Please be aware that the allowance can only be claimed once in the tax year so will cover all self employments, effectively meaning that your expenses will be capped at the £1,000 allowance figure for all trades.

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