Trading and property allowances: the £1,000 tax-free allowances explained
Published · 4 min read · Figures checked . UK rules and rates change, so check the official sources below before you act.
Some people earn a little extra from odd jobs, selling their time or renting out property. This guide explains the two £1,000 allowances, when you do not need to tell HMRC, and when the rules stop applying.
Who this guide is for
This guide is general information for people in the UK with small amounts of income from casual work, self-employment or letting property. It does not cover income from a company or partnership you are involved in, or income from your employer, which are treated differently. It is not advice for your own situation.
The rules are the same across England, Scotland, Wales and Northern Ireland, because they are UK-wide HMRC rules. The figures below apply in the 2026/27 tax year (6 April 2026 to 5 April 2027) and were checked on GOV.UK on 13 October 2026.
The two allowances
GOV.UK says you can get up to £1,000 each tax year in tax-free allowances on certain income. There are two separate ones, so a person with both kinds of income can get £1,000 for each.
- The trading allowance covers income from self-employment, casual services such as babysitting or gardening, and hiring out personal equipment such as power tools.
- The property allowance covers income from land or property. If you own a property jointly with someone, each owner gets their own £1,000 against their share of the gross rental income.
If your income is £1,000 or less
GOV.UK says that if your gross income from the activity is £1,000 or less, you generally do not need to tell HMRC or declare it on a tax return. It is still sensible to keep records of what you received, because the allowance only works if the income really is within the limit. Sole traders must keep records of business income and expenses for Self Assessment.
If your income is more than £1,000
If your gross income is over £1,000, there are two ways to work out your taxable profit. One is to deduct the full £1,000 allowance from your income. This is called partial relief. The other is to ignore the allowance and deduct your actual allowable expenses instead.
GOV.UK explains that you cannot use the allowance on top of expenses for the same income. Many people find it is worth comparing both ways. If real expenses are higher than £1,000, claiming expenses can leave less profit to tax.
When you cannot use the allowances
GOV.UK says you cannot use the allowances in a tax year if you have trading or property income from any of these:
- a company that you or a connected person owns or controls
- a partnership where you or a connected person are a partner
- your employer, or the employer of your spouse or civil partner
There are extra limits on the property allowance. It cannot be used against income covered by the Rent a Room Scheme. It also cannot be used if you claim the tax reducer for finance costs, such as residential mortgage interest. You also cannot use it to create a loss.
Registering for Self Assessment
GOV.UK lists several reasons you may need to register for Self Assessment. One is gross trading income over £1,000. If your gross income for a tax year is over £1,000, the page says to register by 5 October in the following tax year. For 2025/26 income, that deadline was 5 October 2026, and GOV.UK says that telling HMRC after the deadline could lead to a penalty.
GOV.UK also says to contact HMRC if your gross trading or property income is more than £1,000 but not more than £2,500, or if you are unsure whether you can use the allowances.
Records
GOV.UK says that, for Self Assessment, records should be kept for at least 5 years after the 31 January submission deadline of the relevant tax year.
Check before you act
Rules, allowances and deadlines can change, and your own circumstances matter. It can be worth confirming the details on the official pages linked below before deciding what to do. Free help is available from Citizens Advice, and HMRC can be contacted directly.
Sources
For information only. See our disclaimer and editorial standards. Spotted an error? Tell us.
