One line in Wednesday's Budget will matter more to far more people than any of the headline rate changes: the amount you can earn from a side hustle before any of it is taxable is tripling, from £1,000 to £3,000, from April 2027. It is the kind of change that gets a paragraph in most coverage and a full page here, because it touches a genuinely huge and fast-growing group of people — anyone reselling on Vinted or eBay, tutoring at weekends, walking dogs, or doing the odd freelance job alongside a main job. Our view: this is a well-aimed piece of simplification, not a loophole. It takes the smallest, least-organised income out of the tax system entirely, and leaves the system's attention on the people actually running a business.
What actually changed, in the numbers the Treasury and the Guardian have put on it
The trading allowance is the amount of income from self-employed or casual trading activity you can earn each tax year before it counts towards your tax bill at all. It has sat at £1,000 since it was introduced in 2017. From April 2027 it rises to £3,000. The Guardian reports that up to 1.4 million people could benefit from the change, with HM Revenue and Customs data supplied to accountancy firm Lubbock Fine showing the scale of what has grown underneath that £1,000 ceiling: 2.6 million people made money selling goods through platforms including eBay, Vinted and Etsy last year, up from just 450,000 in 2024. That is not a niche behaviour any more; it is a mainstream way a huge number of UK households top up their income, and the old threshold was catching ordinary sellers in paperwork designed for people running proper businesses.
Of the 1.4 million affected, the Guardian puts a figure on two distinct groups. An estimated 400,000 people will see their tax bill fall, by an average of £380 a year. Separately, around 100,000 people will no longer have to report their trading income to HMRC at all, because it will sit entirely inside the new, larger allowance. Those are two different kinds of win: one is cash back in your pocket, the other is an afternoon of admin you no longer have to do every January.
The worked numbers: what £1,000 against £3,000 actually means for a seller
Take an illustrative example: someone in full-time employment who also resells trainers and clothing on Vinted and eBay in the evenings, clearing £2,200 a year in sales income after the cost of what they bought to resell. Under today's rules, the first £1,000 of that is tax-free under the trading allowance, but the remaining £1,200 is taxable profit. As a basic-rate taxpayer on their main job, that £1,200 is taxed at 20%, a bill of £240 — and because their trading income is over £1,000, they must register for self-assessment and file a return for it every year, even though the business is a hobby that pays for itself and a bit more.
From April 2027, the same £2,200 of sales income sits entirely under the new £3,000 allowance. The tax bill on it drops from £240 to nothing, and because the gross income is under £3,000, there is a reasonable case they will not need to register for self-assessment for this income stream at all. That is the £380-a-year average the Guardian reports landing for real, not as an abstraction: a reseller with a slightly bigger year, say £2,800 of sales profit taxed at 20% today, is currently paying £360 in tax on the £1,800 above the old threshold — close to that reported average — and will pay nothing on it from April 2027.
It is worth being precise about who is not affected by this: anyone simply clearing out their own wardrobe or garage and selling things for less than they originally paid for them is not trading in the tax sense at all, allowance or no allowance, because there is no profit to tax. The £3,000 figure only ever bites once you are buying with a view to reselling, making things to sell, or charging for a service.
What this means for you, depending on what kind of side income you have
If your side hustle brings in somewhere between £1,000 and £3,000 a year, after April 2027 you are very likely out of the tax and admin system for it entirely — worth knowing if you have been dutifully filing a self-assessment return each year for a few hundred pounds of extra income. Until then, the current £1,000 limit still applies, so keep declaring as normal for this tax year and the next.
If your side hustle earns more than £3,000, you still benefit, just differently. You cannot exempt income above the allowance, but as AJ Bell's Sarah Coles told the Guardian, you keep the choice to deduct the £3,000 allowance instead of your actual costs when calculating taxable profit, rather than itemising real expenses and capital costs. For anyone whose genuine costs — postage, platform fees, stock — run below £3,000 a year, that is a bigger automatic deduction than before, with no extra bookkeeping required to claim it.
If you are already a self-employed sole trader with this as your main income rather than a side line, the allowance rise does not change much for you directly, since you will already be past £3,000 and filing properly. But it is a useful marker for anyone wondering when a hobby tips into a business HMRC expects to see — and our sole trader accountants team sees that exact conversation play out often, usually before the person asking has quite admitted to themselves that it has already happened.
What to actually do this week
If you currently earn between £1,000 and £3,000 from a side hustle and have been filing a self-assessment return for it, carry on as normal for this tax year and 2026-27 — the current £1,000 limit is still the law until April 2027, and the rules on platforms like eBay, Vinted and Etsy reporting seller data to HMRC once you pass 30 sales or around £1,700 in a year have not changed either. Keep a simple record of your sales and what you paid for stock now, because having that already organised makes the switch to the new allowance, and the choice between the flat £3,000 deduction or itemising real costs, a five-minute decision in April 2027 rather than a scramble. If you are not sure whether what you are doing already counts as trading rather than simply clearing things out, that is exactly the kind of question our self-assessment team answers quickly and without judgement.
This is precisely the territory our self-assessment service is built for: working out what actually needs reporting, what doesn't, and making sure nobody pays tax on income that was never taxable in the first place.
What is still uncertain, and when we'll know
The headline figures — £3,000 and an April 2027 start — were confirmed by the Chancellor in the Budget speech and are the numbers to plan around now. What has not yet been published is the Finance Bill legislation that will set out the precise drafting, including exactly how the higher allowance interacts with Making Tax Digital for Income Tax thresholds for anyone who also has separate self-employment or property income running alongside a side hustle. Jane Hawkes of the Lady Janey blog, also quoted by the Guardian, makes the point worth holding onto in the meantime: the allowance doesn't remove the need to understand the difference between selling unwanted personal belongings and trading for profit, so keep treating that distinction carefully even as the numbers around it get more generous.