Budget 2026 • Free calculator • Nothing stored

Trading allowance checker: £1,000 now, £3,000 from April 2027

The Budget on 28 October 2026 announced that the trading allowance and the Self Assessment reporting threshold both go up to £3,000 from 6 April 2027. Enter your income and costs to see whether the allowance or your real expenses is better, and whether you’d still have to file.

Both years side by side2026/27 at £1,000 and 2027/28 at £3,000, from the same figures.
Do I have to file?Checks your income against the reporting threshold for the year.
Announced, not lawThe £3,000 is subject to the Finance Bill. We label it everywhere.
Example figures — replace with your own. Example figures are filled in so you can see how it works — replace them with your own before relying on the result shown.

1. Your self-employed income

Use your gross income from the trade before any expenses, and what your costs really were. Both are for one tax year.

Everything you were paid for the work, before costs. Include CIS before the 20% was taken off.
Enter 0 or more.
Tools, materials, fuel, insurance and so on that you could prove.
Enter 0 or more.
The allowance can’t be used for that income.

2. Your other income

So we can estimate the Income Tax on the profit.

Wages, a pension or other profit, before tax. Use 0 if there’s none.
Enter 0 or more.
Scotland has its own Income Tax bands; NI is the same UK-wide.

Show the maths

How we got your figure

Every step uses the figures you entered and the allowance for the year shown.

The step-by-step working will appear here.

Guide

How the trading allowance works

The trading allowance lets you ignore a slice of your self-employed income for tax instead of working out your costs. It’s £1,000 a tax year today. The Budget announced it will rise to £3,000 from 6 April 2027, subject to legislation. The Self Assessment trading income reporting threshold is announced to rise to £3,000 on the same date.

  1. Full relief. If your gross trading income for the year is no more than the allowance, you have no tax to pay on it. From April 2027 the government says you also won’t have to declare it.
  2. Partial relief. If your income is higher, you can deduct the allowance instead of your actual expenses. You pick one or the other for all your trading income that year. It’s the better choice when your real costs are less than the allowance.

You can’t use the allowance for income from your employer, from a company you or your partner control, or from a partnership you’re in. Those need actual expenses.

If your costs are more than your income you’ll have a loss, and you can only claim it by registering for Self Assessment and using actual expenses. See our guide the £3,000 trading allowance explained.

Things people forget

Gross income, not profitThe limit is tested on income before costs. £3,500 of sales with £2,000 of costs is over a £3,000 limit.
One or the otherYou can’t claim the allowance and your expenses on the same income. Pick whichever leaves less taxable profit.
Losses need expensesThe allowance can’t create a loss. To claim one against other income you must register and use actual costs.
Reasons to register anywayYou may want to register voluntarily to pay Class 2 NI for your State Pension, or to show income for Tax-Free Childcare or Maternity Allowance.
Different jobs, one allowanceThe allowance is per person, per tax year. It’s shared across all your trades, not given again for each one.
Other tests still applyThis is Income Tax only. MTD, VAT and your own tax return may still apply for other reasons.

Frequently asked questions

What is the trading allowance?

It’s a tax-free allowance for small amounts of self-employed income. If your gross trading income is within the allowance you pay no tax on it. If it’s higher you can deduct the allowance instead of your actual expenses. For 2026/27 it is £1,000.

How much will the trading allowance be in 2027/28?

The Budget on 28 October 2026 announced it will rise from £1,000 to £3,000 from 6 April 2027. This is announced and subject to legislation in the Finance Bill, so it’s not law yet.

Will I still need to file a tax return if I earn under £3,000?

The government has said the Self Assessment reporting threshold for trading income also rises to £3,000, and that people whose income is covered by the allowance will no longer have to declare it. You may still need to file for other reasons, such as other untaxed income. Until the change, the £1,000 limit applies.

Should I use the trading allowance or claim expenses?

Use whichever gives the lower taxable profit. If your real costs are less than the allowance, the allowance is better. If they’re more, claim your expenses. The checker compares both on your figures.

Can I claim the allowance and my expenses together?

No. You must choose one for all your trading income in the tax year.

Does the trading allowance apply to income from my own company?

No. It can’t be used for income from a company you or your partner control, a partnership you’re in, or your employer or a connected person. Claim your actual expenses instead.

Can I claim a loss using the trading allowance?

No. To claim a loss you must use actual expenses and file a return. You can register voluntarily if your income is below the reporting threshold.

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Sources and review

Last checked: 28 October 2026. Every figure on this page was checked against GOV.UK and the Budget 2026 documents on that date by the HandySums team. Figures marked “announced” were announced on 28 October 2026 and are subject to legislation, so they can still change. We’ll update this page when the Finance Bill is published and whenever GOV.UK changes. HandySums is independent and not an accountancy firm — see how we check our sums.

Estimate only — not tax advice. This checker compares the trading allowance with your actual expenses for one trade and estimates Income Tax on the profit using your other income. It does not include Class 4 or Class 2 National Insurance, CIS deductions, the property allowance, Making Tax Digital or VAT. The 2027/28 allowance and reporting threshold are announced and subject to legislation. Your actual bill depends on your full Self Assessment. Verify with HMRC or a qualified accountant. The figures you enter stay in your browser and are not stored.