Budget 2026: Trading Allowance to rise to £3,000

In the Budget published on 28 October 2026, the UK government announced that the Trading Allowance will rise from £1,000 to £3,000 per tax year. The Self Assessment reporting threshold for this qualifying trading income is also set to rise to £3,000. The start date is 6 April 2027, the first day of tax year 2027/28. The measure is due to be legislated through Finance Bill 2026–27. It is an announced change, not a rule already in force.

Who can benefit

The allowance applies to individuals across the UK, including sole traders and people earning from casual services such as babysitting or gardening, or hiring out personal equipment. It is tested against gross income before expenses from one or more qualifying activities, not profit. The current £1,000 limit remains in place for tax year 2026/27. The separate £1,000 property allowance has not been increased by this announcement.

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Practical effect

Under HMRC's published description, an individual whose total qualifying gross income in 2027/28 is no more than £3,000 will normally be able to use full relief and not report that income. Above the threshold, the Trading Allowance can be deducted instead of actual expenses where that produces a better outcome. You cannot deduct both for the same activity. Partnership income does not qualify, and restrictions also apply to income from an employer, connected companies and partnerships.

Example: £2,400 of qualifying gross income in 2027/28 with £400 of expenses could potentially be covered by the announced full relief. With £4,000 of gross income, the individual could deduct the £3,000 allowance instead of expenses if the final law matches the announced policy. Other tax and benefit obligations still need checking separately, including National Insurance and any reason to file a return outside this trading income.

What to do

1. Keep the tax years separate: 2026/27 ends on 5 April 2027 and the new threshold is announced for 6 April onward.
2. Keep invoices, receipts, bank statements and income records. HMRC requires records even when full relief applies.
3. If you are already in Self Assessment or need a return for another reason, do not stop filing automatically. Check your position with HMRC.
4. Before filing for 2027/28, check the enacted Finance Bill and updated HMRC guidance. The current HMRC guidance still describes the existing £1,000 threshold.

Start date: 6 April 2027 at 00:00 Europe/London time, as announced. Full relief does not normally require a separate application. Those already filing Self Assessment should check the updated return instructions.