The £1,000 trading allowance for gig workers

Summary

The £1,000 trading allowance in 2025-26 is a tax-free chunk of trading income aimed at small and casual self-employment, including gig work.

For gig workers, it looks simple but has nasty traps: the £1,000 limit is across all self-employment combined, it is on gross income not profit, and you must choose either the allowance or your actual expenses. Never both.

With DAC7 platform-reporting rules now live, HMRC can see your Uber, Deliveroo, Amazon Flex and other app income anyway, so treating £1,000 as a "don't tell HMRC" line, as some TikTok and Reddit posts suggest, is a good way to pick a fight with HMRC while the platforms hand over your numbers.

Key facts (UK 2025-26)

• The trading allowance is a tax-free allowance of up to £1,000 of gross trading income per individual per tax year, still in place for 6 April 2025 to 5 April 2026.
• It applies to trading, casual and miscellaneous income, including self-employed gig work such as Uber, Deliveroo, Amazon Flex, Just Eat, Stuart, Gophr and other app-based side jobs.
• The £1,000 limit is based on your total gross trading income from all trades combined, not per platform or per side hustle.
• If your annual gross trading income in 2025-26 is £1,000 or less, and you meet the conditions, you may not have to tell HMRC or file a return. This is called "full relief".
• If your annual gross trading income is more than £1,000, you can still claim up to £1,000 as a flat deduction instead of your actual expenses. This is "partial relief", but you must register for Self Assessment and file.
• You cannot claim the £1,000 allowance and deduct the same business expenses. It is a choice each year for each trade: trading allowance or real expenses.
• From 1 January 2024, UK platforms must collect and report seller/worker income data to HMRC under the OECD "DAC7-style" reporting rules, with first reports due 31 January 2025; HMRC guidance confirms this covers digital platforms in the gig economy.

Legislation, case law, regulation

• Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005): trading income and miscellaneous income rules; the trading allowance (up to £1,000) is legislated here via s.783A and related provisions.
• Finance Acts (from 2017 onwards): introduced and preserved the £1,000 trading and property allowances; HMRC's guidance "Tax-free allowances on property and trading income" summarises the 2025-26 position.
• Taxes Management Act 1970: governs Self Assessment, including when a trader has to file despite having income under or just above the allowance.
• OECD Model Rules for Reporting by Platform Operators and UK implementing regulations: create the UK digital-platform reporting regime broadly aligned with DAC7, requiring platforms to send HMRC data on sellers' income from 2024 onwards.
• HMRC guidance, Tax-free allowances on property and trading income: sets the official 2025-26 rules on when the trading allowance applies, when it does not, and how to use full or partial relief.
• LITRG guidance, Trading allowance and Gig economy: applies the rules to gig workers specifically and gives examples of when you must still file even with small side gigs.

How it actually works

1. What the trading allowance is

The trading allowance is a tax exemption that lets an individual have up to £1,000 of gross trading income in a tax year without paying tax on that slice.

"Trading income" includes:

• self-employment income;
• casual jobs (for example ad-hoc delivery shifts, gardening, tutoring, local courier runs);
• small "gig economy" earnings through platforms, exactly what an Uber driver, Deliveroo rider or Amazon Flex driver is doing.

It is per person per year, not per app, not per gig.

2. Full relief, when gross income is £1,000 or less

If your total gross trading income in 2025-26 from all self-employment is £1,000 or less, and there is no other reason you need a return, you can:

• treat the income as covered by the trading allowance (full relief);
• not tell HMRC about that income;
• not register as self-employed just for that small amount.

You still need to keep records, because HMRC or a benefits agency may ask how you live on those numbers, and because you might breach £1,000 the next year.

3. Partial relief, when gross income is over £1,000

If your gross trading income is more than £1,000, you must register for Self Assessment and file a return.

Then you have a choice for that trade:

Option A, Trading allowance as a flat deduction:

• Ignore your actual expenses.
• Deduct up to £1,000 from your gross trading income (not more than the income itself).

Option B, Claim actual expenses:

• Put in your real income and real allowable expenses (fuel, insurance, repairs, phone, bag, etc.).
• Do not also claim the trading allowance for that same income.

You choose whichever gives lower profit, because lower profit means less tax and Class 4 National Insurance.

4. One allowance, all gigs combined, not per platform

The single biggest trap for gig workers is thinking the allowance is "£1,000 each" per platform.

HMRC and LITRG both say you must:

• add together all trading/casual/miscellaneous income: Uber plus Deliveroo plus Amazon Flex plus any other side self-employment;
• compare that total gross figure to £1,000.

So:

• £999 from Uber + £100 from Deliveroo = £1,099 gross, over the line.
• You now must register and file, even if your actual profit after petrol and repairs is tiny.

5. When expenses beat the trading allowance

The trading allowance works best when your expenses are small. If your expenses are more than £1,000, you are often better off ignoring the allowance and claiming actual costs.

Common gig cases where expenses over £1,000:

• Uber driver with hire-and-reward insurance, high fuel spends and regular servicing.
• Amazon Flex driver doing long-distance motorway work in a personal car.
• Rider who bought a decent e-bike mid-year, plus ongoing repairs and kit.

In those situations, treating the allowance as a flat £1,000 expense can leave you paying more tax than necessary because your actual expenses might be £3,000 to £8,000.

6. How to report on the tax return (2025-26 style)

On the 2025-26 Self Assessment return (SA103, with notes in SA103F notes 2026):

• You enter your total trading income for each business.
• You either:
  • enter actual expenses category by category; or
  • treat the trading allowance as a single expense and do not list actual expenses (HMRC notes confirm the allowance can be "used as an expense instead of deducting actual expenses").

If you use software (like untied or similar), it will often automatically choose the trading allowance if your actual expenses are less than £1,000 and you have not made a loss.

7. Interaction with employment income

The trading allowance is separate from your PAYE job:

• Your employment income via PAYE is taxed with its own rules, personal allowance and tax bands.
• The trading allowance only applies to self-employment, casual and miscellaneous trading income.

So you can have:

• a full-time job paying £25,000 via PAYE;
• a side gig earning £900 from Uber and £50 from Deliveroo (total £950);
• The trading allowance can cover the £950 gig income while your PAYE job is taxed as usual.

If the gig total goes to £1,100, you are now into Self Assessment territory even though the PAYE job continues as before.

8. Platform reporting, HMRC will see your gig income

From 1 January 2024, UK digital platforms have to collect and report data on sellers' income to HMRC, with first reports due by 31 January 2025.

Tax charities emphasise this for gig workers:

• HMRC will receive annual totals for many platform workers, including couriers and drivers.
• If you use the trading allowance, you still need basic records and must be ready to justify how you applied it.
• If you simply fail to declare gig income on the basis "it's under £12,570", you are ignoring both the £1,000 trading allowance rule and the fact that the platforms are reporting many earnings directly to HMRC.

Worked example

Example 1: Small Deliveroo side-gig under £1,000 (full relief)

You are a student doing Deliveroo on a bike.

• 2025-26 gross income from Deliveroo: £850.
• No other self-employment or casual trade.

Because £850 is below the £1,000 trading allowance, and you have no other reason to do a tax return:

• You can claim full relief from the trading allowance.
• You do not need to tell HMRC about this gig income.
• You keep basic records in case they ask.

Example 2: Uber + Deliveroo over £1,000 (must file, choice of method)

• Uber gross income: £999.
• Deliveroo gross income: £100.
• Total gross trading income 2025-26: £1,099.
• Vehicle and other actual expenses: £600.

You are now over the £1,000 threshold.

You must:

• register for Self Assessment;
• file a tax return showing this self-employment.

You can choose:

Option A, trading allowance as expense (partial relief):

• Treat the allowance as an expense of £1,000.
• Profit = £1,099 minus £1,000 = £99.
• You do not deduct the £600 actual expenses on top.

Option B, actual expenses:

• Profit = £1,099 minus £600 = £499.

Option A (using the allowance) gives lower profit (£99 vs £499) here, so most people would pick it.

Example 3: Full-time Uber driver where expenses are over £1,000 (trading allowance worse)

• Uber and Amazon Flex gross: £12,000 in 2025-26 (part-time driver).
• Actual vehicle and related expenses:
  • Fuel: £2,200
  • Insurance: £900
  • Repairs and servicing: £600
  • Phone and data: £200
  • Cleaning and kit: £200
• Total actual expenses = £4,100.

Compare methods:

Trading allowance route: Profit = £12,000 minus £1,000 = £11,000.

Actual expenses route: Profit = £12,000 minus £4,100 = £7,900.

If the driver used the trading allowance, they would be taxed as if their profit were £11,000 instead of £7,900. They would pay income tax and Class 4 NI on an extra £3,100 of pretend profit.

For an Uber driver with realistic vehicle costs, the trading allowance is often worse than expenses once turnover gets beyond a few thousand pounds.

What Reddit, TikTok and forums get wrong

1. "The trading allowance is £1,000 per platform, you get £1,000 from Uber and £1,000 from Deliveroo tax-free." Wrong. HMRC and LITRG both say the £1,000 allowance is per person per year and applies to total gross trading income from all trades combined.

2. "If your gig income is under £12,570, you don't even need to think about tax, the personal allowance covers it." Misleading. The trading allowance line is £1,000 of gross income; once you go over that, you may have to register and file Self Assessment even if your profit is small and your total income is under £12,570.

3. "Using the trading allowance and deducting your expenses is a great hack, HMRC never checks." That is straightforward over-claiming. HMRC's guidance is crystal-clear: you either use the trading allowance or deduct your actual expenses, not both.

4. "If you don't tell HMRC about side-gig income, Student Loans Company and HMRC won't know, it's ''off the books''." That ignores DAC7-style platform reporting. New rules from 1 January 2024 require many digital platforms to report seller income to HMRC, with first reports due 31 January 2025. LITRG and MoneySavingExpert both warn gig workers that HMRC will have platform data and is already using "nudge" letters to people caught by these reports.

5. "The trading allowance is tiny and pointless for gig workers, ignore it and always use expenses." Often wrong for very small or truly casual gig work. For someone making, say, £700 from Deliveroo or £800 from a few Amazon Flex blocks with almost no extra costs, the allowance can mean no registration, no tax return and no tax on that income in 2025-26.

Action steps for the reader

1. Add up all your expected gig and side-gig income (Uber, Deliveroo, Amazon Flex, Just Eat, Stuart, Gophr, any other self-employment) for 6 April 2025 to 5 April 2026. Use gross figures before expenses.
2. If that total is £1,000 or less, read HMRC and LITRG guidance on full relief; if it's over £1,000, plan to register for Self Assessment and file.
3. Work out your realistic annual expenses (fuel, insurance, repairs, kit, phone, platform charges). If they will be over £1,000, treat the trading allowance with suspicion and compare both methods before you file.
4. If you already used the trading allowance in the past while also claiming full expenses because a forum or TikTok told you it was a "hack", look at LITRG's guidance on correcting errors and consider speaking to a union-linked or reputable accountant.
5. Remember that platforms are starting to report your earnings anyway under the UK's DAC7-style rules; treat the £1,000 allowance as a planning tool, not a hiding place.

Related tools GigKiln should build

• Trading-allowance vs expenses calculator: takes gig turnover and expenses, shows which method (allowance or actual) gives a lower taxable profit.
• £1,000 line tracker: simple tool that adds up all gig platform income through the year and warns when the user is close to crossing the allowance.
• Platform-data awareness checker: brief questionnaire about which platforms people use and how much; then explains how DAC7-style reporting will expose undeclared income.

Related guides

• "First Self Assessment for gig workers: when the £1,000 trading allowance still means you must register"
• "Expenses vs trading allowance for Uber, Deliveroo and Amazon Flex: real-world examples"
• "Platform reporting (DAC7) and what it means for Uber and Deliveroo workers"
• "Side-hustle tax myths: what Reddit and TikTok get wrong about the £1,000 trading allowance"

Sources

Primary

• GOV.UK, Tax-free allowances on property and trading income, accessed 18 April 2026.
• LITRG, Trading allowance, accessed 18 April 2026.
• LITRG, Gig economy, accessed 18 April 2026.
• GOV.UK, Self-employment (full) notes (SA103F notes 2026), section on the trading income allowance, accessed 18 April 2026.
• GOV.UK, Income Tax rates and Personal Allowances, accessed 18 April 2026.

Secondary

• Merranti Accounting, Using the Trading Allowance in 2025-26, when the £1,000 tax-free limit applies, accessed 18 April 2026.
• FSL Accountancy, A Complete Guide to Understanding the Trading Allowance on Gross Income Tax UK 2025, accessed 18 April 2026.
• untied, Tax essentials for digital platform workers and others in the gig economy, accessed 18 April 2026.
• LITRG, New rules for gig economy workers, your questions answered, accessed 18 April 2026.
• LITRG, Gig workers should get ready for important October tax deadline, accessed 18 April 2026.
• Tipalti, What HMRC's New Reporting Rules Mean for Online Platforms, accessed 18 April 2026.
• Taylor Wessing, Reporting rules for digital platforms, HMRC guidance on UK implementation, accessed 18 April 2026.
• Tax Natives, Digital platforms in the UK face new reporting obligations, accessed 18 April 2026.
• MoneySavingExpert, Side hustle tax rules set to change, Martin Lewis' MSE news, accessed 18 April 2026.