The UK government will raise the annual tax-free trading allowance — the amount people can earn from small-scale sales or side activities without paying tax — from £1,000 to £3,000, the chancellor announced in the budget. The change is scheduled to take effect in April 2027 and is expected to benefit as many as 1.4 million people who earn extra income from hobbies, reselling or other sideline activities.
The trading allowance was introduced to simplify tax reporting for people with low levels of trading income. Under the revised limit, a greater number of casual sellers and micro-entrepreneurs will fall below the threshold at which they must declare and pay tax on that income, the chancellor said. The budget statement indicated some individuals could save hundreds of pounds in tax as a result of the increase.
Officials framed the move as an effort to reduce the compliance burden on small-scale traders who operate alongside other employment or studies. By raising the threshold, the government aims to make it easier for people to earn modest sums from activities such as selling second-hand goods online, craft sales or occasional freelance work without triggering tax reporting obligations.
The change was announced as part of the wider budget package. It will be implemented from the start of the 2027-28 tax year in April, giving affected taxpayers and advisers time to adjust. Further details on how the revised allowance will interact with existing income tax rules and reporting requirements are expected to be clarified by HM Treasury and HM Revenue & Customs ahead of the new threshold taking effect.