Trading allowance trebled to £3,000 from April 2027: do you still need to register for Self Assessment?

The short answer: Not if your side income stays at £3,000 or less, but only from 6 April 2027. The Budget trebles the trading allowance from £1,000 to £3,000 for 2027/28 onwards, and the Self Assessment threshold rises with it. For the current 2026/27 tax year, the old £1,000 limit still applies.

The quick version

• The trading allowance goes up from £1,000 to £3,000 from 6 April 2027.

• If your gross trading income is £3,000 or less, you won't need to declare it or pay tax on it.

• Until then, earning over £1,000 still means registering for Self Assessment.

• You can use the allowance or claim your actual expenses, not both.

• It still has to pass into law through the Finance Bill 2026-27.

Last updated 2 November 2026.

What is the £3,000 trading allowance?

The trading allowance is a tax-free amount for small bits of self-employed or casual income. From April 2027 it covers your first £3,000 a year instead of your first £1,000.

HMRC's guidance says it covers income from:

• self-employment

• casual services, such as babysitting or gardening

• hiring out your own equipment, such as power tools

The Budget's overview of tax legislation confirms the rise to £3,000. If the allowance covers all your income before expenses, you won't have to declare it or pay tax on it.

Two details catch people out. First, the limit is on your gross income, which is what customers pay you before any costs come off. HMRC's Tax Help for Hustles page puts it plainly: it's not the same as profit. Second, you get one allowance a year, not one per side hustle. Dog walking and selling candles both count towards the same £3,000.

Tax treatment depends on the individual circumstances of each client and may be subject to change in future.

When does the trading allowance go up to £3,000?

On 6 April 2027, the first day of the 2027/28 tax year. HMRC's tax information and impact note says the change applies "for the tax year 2027 to 2028 onwards". It also needs the Finance Bill 2026-27 to pass, so it isn't law yet.

That means money you earn now, in 2026/27, is still under the £1,000 rules.

Figures for 2027/28 are as announced in the Budget on 28 October 2026. Deadlines follow HMRC's rule of 5 October after the tax year ends.

Do I need to register for Self Assessment if I earn under £3,000 from a side hustle?

From 2027/28, usually not. The policy paper says the Self Assessment reporting threshold for trading income also goes up to £3,000. So if your only reason for a tax return is a small side hustle, and your takings stay at £3,000 or less, you shouldn't need to register for it.

For 2026/27, the answer is different. You must send a tax return if you were a sole trader and earned more than £1,000 before costs. HMRC's side hustle page is clear that you can't wait for the new limit: if you earn over £1,000 now, you still need to tell HMRC. If that's you, you'd normally register by 5 October after the tax year ends. Our guide on how to register as a sole trader walks through the steps.

Even under £3,000, there are times you'd still need or want to register. HMRC lists these reasons:

• you made a loss and want to claim relief for it

• you want to pay voluntary Class 2 National Insurance to protect some benefits

• you want to claim Tax-Free Childcare based on your self-employed income

• you want to claim Maternity Allowance based on your self-employment

Voluntary Class 2 costs £3.65 a week in 2026/27.

One loose end: HMRC's side hustle page also mentions a new online tool, due by 2029, for people earning between £1,000 and £3,000. HMRC hasn't yet explained how that fits with the £3,000 threshold from April 2027, so it's worth checking back nearer the time.

Can I use the trading allowance and claim expenses?

No, it's one or the other. HMRC calls using the allowance against bigger income "partial relief": you take off up to the allowance instead of your actual costs. If your costs are higher than the allowance, HMRC says claiming expenses may work out better.

Example: a £2,400 dog walking side hustle

These are made-up, round numbers. They assume you have a full-time job that already uses your Personal Allowance, so your extra profit is taxed at the 20% basic rate. Rates differ in Scotland.

You earn £2,400 a year walking dogs at weekends and spend £200 on leads, treats and bags.

In 2026/27, claiming your £200 of expenses would leave £2,200 taxable, so the £1,000 allowance is the better choice. From 2027/28, the whole £2,400 is covered, so there's no tax and no return to file for it.

Example: a £5,000 craft business

Same assumptions. You sell £5,000 of handmade cards a year and your materials cost £600.

• 2026/27: take off the £1,000 allowance, pay 20% on £4,000, so £800 tax.

• 2027/28: take off the £3,000 allowance, pay 20% on £2,000, so £400 tax.

Claiming your £600 of costs instead would leave £4,400 taxable in either year, so the allowance wins. If your costs were £3,500, though, you'd claim those instead. Our guide to what sole traders can claim as expenses helps you add them up.

Whichever you use, keep records of your income: invoices, a simple spreadsheet, bank statements or platform statements all count.

Does the trading allowance apply if I'm employed and self-employed?

Yes. Plenty of people have a payroll job and a side business, and GOV.UK confirms you can do both. The allowance applies to your self-employed income on top of your salary.

There are a few exceptions. You can't use the allowance in a tax year if any of your trading income comes from:

• your employer, or your spouse's or civil partner's employer

• a company that you, or someone connected to you, owns or controls

• a partnership you're in, or one someone connected to you is in

Your employer won't sort your side hustle tax for you either. HMRC's side hustle page points out that this income isn't on your payslip, so telling HMRC is down to you. Our guide to being employed and self-employed at the same time covers how the two sets of tax fit together.

Who gains most from the change?

People with small side incomes. HMRC estimates that up to 1.4 million people could benefit. Of those, about 400,000 should pay less tax, by £380 a year on average. About 100,000 people won't need to report their trading income to HMRC at all.

If you picture side hustlers as twenty-somethings selling trainers, think again. HMRC says people aged 35 to 64 make up 62% of those affected, compared with 46% of UK adults. Which? sums it up: from April 2027, you'll be able to earn up to £3,000 extra before you have to report it.

What can I check now?

1. Add up your gross side income for 2026/27. Count everything you've been paid since 6 April 2026, before costs, across all your side hustles.

2. If it's over £1,000, plan to register. You'd normally need to tell HMRC by 5 October 2027 and pay by 31 January 2028. HMRC's checker tool tells you if you need to.

3. Compare the allowance with your real costs. Use whichever is bigger. The sole trader tax planner can help you estimate what to set aside.

4. Keep your records, even if you expect to be under £3,000 next year.

5. Check whether you'd register anyway, for Tax-Free Childcare, Maternity Allowance or voluntary National Insurance.

Still got questions?

Will HMRC find out about my side hustle?
It's your job to tell HMRC, not your employer's. HMRC's side hustle page warns that if you should have paid tax and didn't, you may get a penalty and pay interest on top.

Is it £3,000 for each side hustle?
No. You get one allowance a year in total. HMRC's example adds £800 from content creation and £500 from selling crafts to get £1,300.

Do I need to tell HMRC if I sell my old clothes online?
Probably not. HMRC says occasionally selling your own unwanted things usually doesn't count. Regularly buying or making things to sell for profit is likely to be trading.

Is the property allowance going up too?
The Budget documents only mention the trading allowance. The separate property allowance, for income from land or property, is still £1,000.

Does using the allowance affect my student loan or Child Benefit?
It can. HMRC says using the allowance reduces the income figure used for student loan repayments and the High Income Child Benefit Charge. It doesn't change your income for Universal Credit.

What if I've already missed the 2025/26 registration deadline?
That deadline was 5 October 2026. Register as soon as you can, because HMRC could charge a penalty. Your return and payment for 2025/26 are due by 31 January 2027.