Chancellor John Healey has announced in the Autumn Budget that the trading allowance will triple from £1,000 to £3,000, a change set to benefit anyone earning extra money through platforms such as eBay, Vinted and Etsy.
The increase, confirmed on Wednesday, will take effect from April 6, 2027, and applies to individuals with small amounts of trading or miscellaneous income, including those selling goods or providing services.
What the Trading Allowance Change Means
Currently, everyone has a £1,000 tax-free allowance for side hustles, meaning earnings below that amount in a tax year, which runs from April 6 to April 5, do not need to be declared to HMRC. Once earnings exceed £1,000, they must be declared, typically by registering for Self Assessment as a sole trader.
Announcing the measure, Mr Healey said: "For those just starting out, I’m tripling the trading allowance – the amount you can earn from a new venture tax-free – from £1,000 to £3,000."
HMRC Data Sharing Rules
Since January 2025, HMRC has had visibility into online selling activity, and non-compliant activity could lead to in-depth investigations or large fines, potentially larger than earnings. Platforms including Vinted, eBay and Etsy now share data with HMRC on sales and users for anyone with more than 30 transactions per year, regardless of profit.
On Vinted, reporting thresholds have been tightened, and users who make either 30 sales per year or exceed £1,700 of gross sales over 365 days must now have their data reported to HMRC.
Government Support for Small-Scale Entrepreneurship
Explaining the change on the gov.uk website, the government states that the trading allowance enables individuals to earn small amounts of trading and miscellaneous income tax-free. The announced increase will provide further support for small-scale entrepreneurship and those starting new business activity.
The change follows a spring 2025 tax update, in which the government announced that the Income Tax Self Assessment reporting threshold for trading income would be increased to £3,000 by the end of this Parliament.
