UK Side-Hustle Tax-Free Allowance to Rise to £3,000 from April 2027: What Changes for eBay, Vinted and Etsy Sellers
People in the UK who earn extra money from a side hustle will be able to earn up to £3,000 a year tax-free from 6 April 2027, after Chancellor John Healey announced in the Autumn Budget on Wednesday 28 October 2026 that the trading allowance would be tripled. The change lifts the current £1,000 threshold and is aimed at people topping up their income from hobbies, reselling and spare-time work.
The measure was confirmed as part of the Budget 2026 package, with legislation to follow in the Finance Bill 2026-27. Until 6 April 2027, the existing £1,000 allowance still applies, so anyone who has already passed that level in the 2026/27 tax year should continue to follow the current reporting rules.
UK Trading Allowance at a Glance
| Detail | What changes |
|---|---|
| Current allowance | £1,000 of gross trading and miscellaneous income per tax year |
| New allowance | £3,000 per tax year |
| Start date | 6 April 2027 (2027/28 tax year) |
| Announced | Autumn Budget, Wednesday 28 October 2026, by Chancellor John Healey |
| Legislation | Finance Bill 2026-27; Budget document measure and HM Treasury overview of tax legislation and rates, measure 1.5 |
| Self Assessment reporting threshold | Also rises from £1,000 to £3,000 for trading income |
| Who could benefit | Up to 1.4 million people, according to government estimates reported by The Guardian |
| Lower tax bills | About 400,000 people, saving an average of £380 a year |
| No longer need to report | About 100,000 people will no longer have to report their trading income to HMRC |
| Test used | Gross income before expenses, across all qualifying trades combined — not per activity |
| Personal allowance context | £12,570 — tax may still be due above the trading allowance if total income exceeds it |
| Status on 30 October 2026 | Announced; not yet in force |
What the Higher Allowance Actually Covers
The trading allowance covers trading and miscellaneous income, which includes selling goods online, freelance work outside a main job, tutoring, dog-walking and other casual services. The key point is that the test uses gross income — the total customers pay before any costs are taken off. A seller with £3,200 of sales and £900 of costs is above the new line even though the profit is £2,300, because the allowance is measured on receipts, not profit.
There is only one allowance per person across all qualifying trades and miscellaneous income, not a separate £3,000 for each activity. A £1,800 Etsy shop and £1,500 of dog-walking add up to £3,300, which is above the threshold. Above the threshold, a person can choose between deducting the allowance or deducting their actual allowable expenses — whichever gives the better result — but cannot deduct both against the same income.
The allowance also does not cover everything that arrives in a bank account. Selling your own clothes or possessions for less than you originally paid is not trading, because no profit is made, and that kind of sale is not what the trading allowance is designed to tax. By contrast, buying or making items with the intention of selling them at a gain is trading, and that profit is what the rules address.
Why the Change Matters Now
The scale of side earning has grown sharply. HMRC data provided to accountancy firm Lubbock Fine showed that 2.6 million people made money selling goods through eBay, Vinted and Etsy last year, compared with 450,000 in 2024. That surge is one reason the higher threshold is expected to reach so many people, even though the cash saving for most is modest: the average £380 saving for the 400,000 people whose bills fall reflects the extra £2,000 of sheltered income taxed at the basic rate for many earners.
The administrative saving may matter just as much as the cash. Sarah Coles, head of personal finance at AJ Bell, said the more generous allowance does more than save tax for people with a small side hustle, because it also takes paperwork off their plate. For the estimated 100,000 people who will no longer have to report their trading income at all, the change removes a Self Assessment obligation entirely — provided their trading and miscellaneous income stays within the new £3,000 limit.
There is a separate reporting system that the higher allowance does not switch off. Platforms are already required to share seller data with HMRC, which now receives information on sellers who make 30 sales or generate €2,000, about £1,700, on a platform in a year. That data-sharing rule is distinct from the trading allowance itself, and sellers should not assume that staying under £3,000 makes their platform activity invisible to HMRC.
What Does Not Change — and What to Do Before April 2027
First, the timing. The £1,000 allowance remains in place for the 2026/27 tax year, which runs to 5 April 2027, and the Self Assessment return for that year is still due by 31 January 2027 for online filers. Anyone who has already earned more than £1,000 of trading income this year cannot apply the £3,000 figure retrospectively.
Second, the allowance is not a blanket exemption for all online income. Reporting of the Budget figures makes clear that tax may still be due once total income, including a main job, passes the £12,570 personal allowance, and that the allowance cannot be used against income from an employer or a company the person controls. People who are unsure about their position should check HMRC’s trading allowance guidance on GOV.UK.
Third, record-keeping still matters. Tracking sales by tax year, separating gross receipts from costs, and keeping platform statements will make the April 2027 switch far easier, especially for sellers whose income sits close to the line. The same prepare-early point applies to other household guidance published this week — see this site’s Be Ready checklist explainer.
This article is general information, not tax advice, and eligibility depends on individual circumstances. The final legislation in the Finance Bill 2026-27 will set the detailed rules, so the £3,000 figure should be treated as announced policy until that legislation is passed.
Frequently Asked Questions
Q: When does the £3,000 trading allowance start?
A: From 6 April 2027, the start of the 2027/28 tax year. Until then the allowance is £1,000.
Q: Does the £3,000 apply to each side hustle separately?
A: No. It is a single allowance per person across all qualifying trading and miscellaneous income in a tax year.
Q: Is the test based on profit or total sales?
A: Total sales, known as gross income, before expenses are deducted. That is why a seller can be over the limit even when profit is lower.
Q: Do I still need to tell HMRC if I earn less than £3,000?
A: From April 2027, where the allowance covers all your trading and miscellaneous income, you will no longer have to declare it or pay tax on it. Until then, the £1,000 limit applies.
Q: What if I earn more than £3,000?
A: You will need to declare the income, and you can choose between deducting the £3,000 allowance or deducting your actual allowable expenses, but not both.
Q: Does selling my own old clothes count?
A: Not as trading, if you sell them for less than you paid. Buying or making items to sell at a profit is different, and that is what the trading allowance covers.
The trading allowance rise is therefore a targeted change, not a tax holiday for online selling. It triples the tax-free room for small earners, removes reporting for about 100,000 people, and cuts bills by an average of £380 for about 400,000 more — but only from April 2027, only on gross trading income up to £3,000, and only once the Finance Bill turns the Budget announcement into law.
