Trading Allowance for Side Hustlers: What You Need to Know for 2025/26
The 2025/26 Trading Allowance: Still £1,000 – Here’s What That Means for You
If you’re earning some extra cash on the side—whether through freelancing, selling online, or offering local services—you might have heard talk about the trading allowance changing.
Here's the deal:
🧾 The trading allowance remains at £1,000 for the 2025/26 tax year.
Let’s walk through what that means, what happens if you earn over that amount, and how Hustle Mate can help you stay sorted, stress-free, and tax-compliant.
What Is the Trading Allowance?
The trading allowance is a tax-free threshold that applies to income earned from casual or self-employed work.
If your total trading income is £1,000 or less in the tax year, you don’t need to report it to HMRC or pay tax on it—unless you want to claim expenses instead.
This is perfect for side hustlers who:
Sell crafts or goods on Etsy, Vinted, or at local markets
Freelance or consult alongside full-time work
Offer services like tutoring, cleaning, baking, or hairdressing
Get paid for odd jobs or digital gigs
Is the Allowance Going Up?
There's been speculation and policy discussion around increasing the threshold for needing to file a Self Assessment tax return—possibly to £3,000 in future.
But for now:
🔒 The tax-free trading allowance remains £1,000 for the 2025/26 tax year.
So while there may be changes down the line, nothing has been confirmed or implemented yet.
What If I Earn More Than £1,000?
If your total self-employed or side hustle income is more than £1,000 (before expenses), here’s what you need to do:
1. Register with HMRC
You’ll need to register as self-employed by 5 October 2026 (if your income goes over the threshold this tax year).
👉 Register here on GOV.UK
2. Track Your Income and Expenses
Even if you're not earning a huge amount, it's essential to keep good records.
🧾 Hustle Mate’s free Sales & Expense Tracker makes it easy to stay organised and ready for tax season.
3. File a Self Assessment Tax Return
You'll need to file your tax return by 31 January 2027 for the 2025/26 tax year and pay any tax due by that date.
Should I Claim the Trading Allowance or Actual Expenses?
If you're earning over £1,000, you can choose:
Claim the £1,000 trading allowance – a simple way to reduce your tax bill.
Deduct your actual business expenses – might save you more if your expenses are high.
You can’t do both in the same tax year, so it’s worth comparing.
What If I’m Under the £1,000 Threshold?
Good news – you don’t need to register, report, or pay tax. But:
If you choose to claim expenses instead of the allowance, you must still file a return.
It’s smart to track income anyway—many small hustles grow quickly!
How Hustle Mate Has You Covered
Whether you're just starting out or taking your side hustle full-time, Hustle Mate is here to make it easier.
✅ Tools and Templates
Grab our Sales & Expense Tracker, Side Hustler Companion Workbook, and Cash Flow Forecast – everything you need to stay financially savvy.
Find all our FREE tools here!
✅ Tax & Legal Support
Our blog breaks down HMRC rules in plain English. Our resources are designed by a Chartered Accountant, so you can trust you’re getting accurate, up-to-date advice.
✅ Join the Community
Get access to:
Ask-an-accountant sessions
Custom Excel templates
Peer support from fellow hustlers
FAQs
Q: Do I need to register as self-employed if I earn less than £1,000?
A: No—as long as your trading income is under £1,000 and you're not claiming expenses, you don’t need to register or file a tax return.
Q: Can I earn £1,000 tax-free from each side hustle?
A: Nope—the £1,000 applies to your total gross trading income, not per business or activity.
Q: Is the £3,000 threshold happening soon?
A: Not yet. It’s been proposed as a future goal for simplifying tax returns, but the allowance remains £1,000 for now.
