The trading allowance reform arrives as digital platforms face strict reporting rules requiring them to send seller details to tax authorities. Under the updated policy taking effect in April 2027, up to 1.4 million Britons earning extra cash through casual work will see their reporting burdens and tax exposures eased. Individuals who exceed the new £3,000 cap will retain the option to deduct capital costs and business expenses instead of using the standard allowance.
Key points
Approximately 100,000 people will be entirely freed from submitting self-assessment tax r…: Approximately 100,000 people will be entirely freed from submitting self-assessment tax reports to HMRC.
Online platforms must still disclose user earnings data to HMRC for sellers making at lea…: Online platforms must still disclose user earnings data to HMRC for sellers making at least 30 transactions or earning €2,000.
Individuals earning beyond the £3,000 limit can still claim legitimate business expenses…: Individuals earning beyond the £3,000 limit can still claim legitimate business expenses rather than the trading allowance.
Sources checked by our analysis pipeline: 1
The amount Britons can earn from a side hustle without paying tax will rise to £3,000 next year in a fillip for those who make extra cash from hobbies or reselling.
Up to 1.4 million people could benefit from the change announced in the budget, with the chancellor confirming the tax-free “trading” allowance will increase from £1,000 to £3,000 in April 2027.
The number of Britons with a side hustle has exploded in recent years, with reselling clothes, tutoring and dog-walking among the popular avenues to create extra income at a time when household finances are under pressure.
Last year, 2.6 million people made money selling goods through platforms including eBay, Vinted and Etsy, according to data provided by HM Revenue and Customs (HMRC) to accountancy firm Lubbock Fine. In 2024 the number was just 450,000.
Currently, people can earn up to £1,000 a year from a side hustle without paying tax but above this you may owe tax if your total income, including your main job, is above the £12,570 personal allowance.
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