UK BUDGET SETS £3,000 TRADING ALLOWANCE

The UK Budget will raise the annual trading allowance from £1,000 to £3,000 in April 2027. The change covers income from activities such as tutoring, dog-walking and making or buying goods to sell for a profit. Up to 1.4 million people could benefit, according to estimates cited with the announcement. People whose trading income stays within the allowance will not need to report it to HM Revenue and Customs (HMRC). Those who exceed it may owe tax, depending on their total income.

HMRC says people may have to pay tax if their total income, including earnings from a main job, exceeds the £12,570 personal allowance. The trading threshold applies to income before expenses, rather than profit after costs. HMRC data provided to accountancy firm Lubbock Fine recorded 2.6 million people making money from sales through platforms including eBay, Vinted and Etsy in 2025, compared with 450,000 in 2024. Rules introduced in 2025 require platforms to give HMRC information about sellers who exceed 30 sales or £1,700 on a platform during a year. The tax year runs from 6 April to 5 April.

Estimates cited with the Budget change suggest about 400,000 people will pay less tax, with an average saving of £380. About 100,000 people are expected to stop reporting their trading income to HMRC. Sarah Coles, head of personal finance at AJ Bell, said the higher allowance “doesn’t just save tax, it also takes the hassle of admin off their plate”. She said people with small side businesses could spend less time on HMRC paperwork.