Trading Allowance 2026: What Gig Workers Need to Know (UK)
The trading allowance is £1,000 per tax year. If your total self-employment income is £1,000 or less, you pay no tax and do not need to register for Self Assessment. Above £1,000, you choose between deducting the flat £1,000 allowance or your actual expenses — whichever reduces your tax bill more.
Key Takeaways
- Trading allowance is £1,000 for 2025/26 — covers all self-employment income combined
- Below £1,000 gross: no tax, no Self Assessment registration required
- Above £1,000: must register and choose allowance vs actual expenses
- You cannot claim both the trading allowance and actual expenses in the same year
- Actual expenses (mileage, phone, insurance) almost always exceed £1,000 for active gig workers
- The allowance applies per person, not per platform — all sources combined count toward the £1,000
What Is the Trading Allowance?
The trading allowance is a tax-free amount introduced by HMRC to simplify reporting for people with small amounts of self-employment or casual income. For the 2025/26 tax year it remains at £1,000.
It works in one of two ways depending on your gross income:
- Gross income £1,000 or less: Your income is fully covered by the allowance. You pay no Income Tax or National Insurance on it, and you do not need to register for Self Assessment or submit a tax return.
- Gross income above £1,000: You must register for Self Assessment. You then choose whether to deduct the flat £1,000 trading allowance from your gross income, or to deduct your actual allowable expenses instead.
If your total trading or miscellaneous income is no more than £1,000, you do not need to tell HMRC about it and you will not pay tax on it.
— GOV.UK — Tax-Free Allowances on Trading Income
The allowance covers income from gig platforms (Deliveroo, Uber Eats, Amazon Flex, Etsy), casual selling, odd jobs, and any other self-employment activity. It does not cover employment income, rental income (which has a separate £1,000 property allowance), or savings interest.
Who Qualifies for the Trading Allowance?
Any UK individual with self-employment or casual trading income can use the trading allowance. It is particularly relevant for gig workers who are just starting out or who work on platforms part-time.
- Deliveroo or Bolt Food riders earning under £1,000 gross in the tax year
- Etsy sellers with occasional sales below the £1,000 threshold
- Uber Eats or Just Eat couriers completing only a few orders per month
- Anyone doing ad hoc cash-in-hand work (cleaning, gardening, dog walking) with total income under £1,000
- Second-job freelancers with small additional earnings from platforms
You cannot use the trading allowance against income from your own limited company or from a partnership in which you are a partner. PAYE employment income is entirely separate and unaffected.
Part-Year Gig Workers
If you started delivering mid-year, only count income earned during that tax year (6 April to 5 April). A driver who joined Uber Eats in February 2026 and earned £780 by 5 April 2026 is fully covered by the trading allowance for 2025/26 and owes no tax for that year.
Should You Use the Trading Allowance or Claim Actual Expenses?
This is the most important decision for gig workers earning above £1,000. The answer depends entirely on whether your actual allowable expenses exceed £1,000.
| Scenario | Gross Income | Trading Allowance | Actual Expenses | Better Choice |
|---|---|---|---|---|
| Occasional Deliveroo rider | £1,400 | £400 taxable | £200 (low mileage) | Trading allowance |
| Part-time Uber Eats driver | £8,000 | £7,000 taxable | £3,200 (mileage + phone) | Actual expenses |
| Full-time Amazon Flex driver | £30,000 | £29,000 taxable | £5,400 (mileage + insurance) | Actual expenses |
| Etsy seller (low volume) | £1,200 | £200 taxable | £80 (packaging, fees) | Trading allowance |
For any gig worker covering significant mileage, actual expenses will almost always produce a lower tax bill. An Uber Eats driver covering 6,000 miles per year claims £2,700 in mileage alone — well above the £1,000 trading allowance. Add phone, insurance, and equipment and the gap widens further.
Use the UKGigTax calculator to compare both methods based on your actual income and mileage figures.
Does the Trading Allowance Apply to Each Platform Separately?
No. The £1,000 trading allowance applies to your total self-employment income across all sources in the tax year. HMRC does not give you a separate £1,000 allowance for each platform.
- £500 from Deliveroo + £600 from Etsy = £1,100 combined — above the threshold, must register
- £400 from Uber Eats + £400 from dog walking = £800 combined — below the threshold, no return needed
- £900 from Amazon Flex only = below the threshold — no return needed
- £1,001 from any single source = must register for Self Assessment
If you have both self-employment income and rental income, the property allowance (also £1,000) covers your rental income separately. These two allowances are independent of each other.
How Do You Claim the Trading Allowance on Self Assessment?
If your gross self-employment income exceeds £1,000 and you choose to use the trading allowance rather than actual expenses, follow these steps on your Self Assessment return:
- Log in to your HMRC online account and open your Self Assessment tax return
- Navigate to the Self-employment (short) or Self-employment (full) section depending on your turnover
- Enter your total gross self-employment income in the income field
- Select the option to use the trading income allowance — HMRC will deduct £1,000 automatically
- Do not enter any expense figures — you cannot claim both the allowance and actual expenses
- Submit and pay any resulting tax by 31 January 2027
If you later realise actual expenses would have been higher, you can amend your return within 12 months of the 31 January filing deadline.
How Does the Trading Allowance Affect Universal Credit?
Universal Credit (UC) calculates your self-employment earnings differently from HMRC Self Assessment. The DWP uses a minimum income floor and monthly reporting cycle rather than an annual tax return.
- Report your gross self-employment income to the DWP each month through your UC journal
- The DWP deducts your actual business expenses (or the £1,000 trading allowance if applicable) to calculate your net earnings
- Lower declared profit reduces your UC taper calculation, potentially increasing your UC payment
- The trading allowance threshold does not exempt you from UC reporting — report all income regardless
- HMRC and DWP systems are separate — using the trading allowance on your tax return does not automatically update your UC record
If you are on Universal Credit and doing gig work, report every pound earned to the DWP promptly. Failure to report accurately can result in overpayments that must be repaid.
Frequently Asked Questions
What is the trading allowance for 2026?
The trading allowance is £1,000 for the 2025/26 tax year. Self-employment income at or below this amount requires no tax return and no tax payment. Above £1,000, you must register for Self Assessment.
Can gig workers use the trading allowance?
Yes. Gig workers on any platform — Deliveroo, Uber Eats, Amazon Flex, Etsy — can use the trading allowance if their combined gross self-employment income is £1,000 or less. Above that, they register for Self Assessment and choose between the allowance and actual expenses.
Should I use the trading allowance or claim actual expenses?
Claim actual expenses if they exceed £1,000 — which is almost always the case for active gig workers with significant mileage. An Uber driver covering 6,000 miles claims £2,700 in mileage alone. Use the trading allowance only if your actual expenses are genuinely below £1,000.
Does the trading allowance apply to each platform separately?
No. The £1,000 allowance covers your total self-employment income across all platforms and sources combined. Earning £600 from Deliveroo and £600 from Etsy gives £1,200 combined — above the threshold.
How do I claim the trading allowance on my tax return?
In the self-employment section of your Self Assessment return, select the trading income allowance option. HMRC deducts £1,000 from your gross income. You cannot also enter actual expenses if you choose this method.
Does the trading allowance affect Universal Credit?
The trading allowance is an HMRC concept and does not automatically update DWP records. You must still report all self-employment income monthly to the DWP via your UC journal, regardless of whether it falls below the £1,000 HMRC threshold.
Can I use the trading allowance and the property allowance in the same year?
Yes. The trading allowance (£1,000 for self-employment) and the property allowance (£1,000 for rental income) are separate. You can claim both in the same tax year if you have both types of income, provided each source qualifies independently.
Tax compliance specialist since 2017. Helped 5,000+ freelancers and self-employed workers navigate HMRC trading allowance rules and UK gig economy tax obligations.