What changes in April 2027

The trading allowance will rise from £1,000 to £3,000 from 6 April 2027, under measures in Budget 2026 delivered on 28 October. The allowance lets people earn a small amount from self-employment, casual work or hiring out their own equipment without paying income tax on it, and the Self Assessment reporting threshold for trading income will also rise to £3,000 at the same time.

Budget summaries drawn from the GOV.UK Budget documents describe the change as tripling the allowance to support people starting a business. It will be made through the Finance Bill 2026-27 and applies to trading and miscellaneous income. The allowance is one total across all of a person's trades, not £3,000 per side hustle, and it does not apply to trading income from a partnership or from a company the person controls.

Nothing changes this tax year

Nothing changes for the current tax year, 2026 to 2027, when the £1,000 allowance still applies. Someone whose gross trading income is £1,000 or less in 2026 to 2027 generally does not need to tell HMRC about that income, provided none of the exceptions apply, while income above £1,000 normally means registering for Self Assessment. The usual registration deadline is 5 October after the end of the tax year.

People joining Making Tax Digital for Income Tax in April 2027 will not get late submission penalty points on their quarterly updates for the 2027 to 2028 tax year, according to the Budget documents. The trading allowance is an income tax measure only, so income covered by it may still have other tax or reporting consequences, and it should not be confused with the Personal Allowance.

Who benefits most

The winners are people with small side earnings and new starters rather than established full-time trades. A separate £1,000 property allowance may apply to property income, and the main income tax rates and bands are unchanged for 2027 to 2028. Anyone unsure whether their income qualifies should check GOV.UK guidance or speak to an accountant, as the Budget summaries stress this is general information, not tax advice.

Sources: Sage | ByteStart | The Smart Sole Trader (Budget documents)