Trading allowance for side hustles, Vinted and eBay
The UK trading allowance is a simple rule with outsized impact for casual sellers. For many people, HMRC allows a deduction of up to £1,000 against trading income instead of listing every allowable expense. If your total trading receipts in a tax year are £1,000 or less, that income is often covered entirely by the allowance and may not need to be declared as a taxable trade — subject to exceptions such as connected-party income and other Self Assessment triggers.
Resellers on Vinted, eBay, Depop, Facebook Marketplace and car-boot circuits ask the same question every spring: “Do I claim the £1,000 allowance or actual expenses?” The answer is whichever leaves less taxable profit, provided you are eligible and you understand you cannot claim both methods on the same trade in the same year.
Allowance versus expenses — the decision
Method A: turnover minus trading allowance (capped at £1,000 or your turnover if lower). Method B: turnover minus allowable expenses and capital allowances. Pick one. If your costs are postage, platform fees, packaging, mileage at approved rates and occasional storage that total £200, the allowance usually wins. If you ship heavy parcels daily and fees eat 40% of revenue, expenses may win.
This calculator asks for turnover and for the expenses you could evidence. It shows taxable profit under both approaches and highlights the lower figure. It does not decide whether you are trading or disposing of personal possessions — that legal distinction still matters. Selling your own worn clothes occasionally is not automatically a trade; repeatedly buying to sell can be.
Why record-keeping still matters
Even when you claim the allowance, you should know your turnover. Screenshots of sales summaries, bank receipts and marketplace statements help if HMRC asks questions. If you later switch to expenses, you will need invoices. Digital folders by tax year beat a shoebox in April.
Interaction with Self Assessment
Crossing £1,000 of trading receipts is a common reason people need a Self Assessment return, but it is not the only reason. Property income, high dividends, HICBC, and HMRC notices can all trigger a return even when trading is tiny. Use HMRC’s “check if you need a tax return” guidance alongside this tool.
Connected parties and other traps
Income from a connected party can prevent use of the trading allowance. If your only “customer” is your own limited company or a close relative’s business, read the GOV.UK allowance pages carefully before filing. Splitting one activity across multiple platforms does not create multiple £1,000 allowances for the same trade.
Property allowance is different
Landlords may have a separate £1,000 property allowance. Do not mix the two. Joint property income, rent-a-room and furnished holiday lets have their own rules. This page is only about trading.
Worked examples
Example 1: Maya sells thrifted jackets on Vinted. Receipts £2,200. Fees and postage £280. Allowance route taxable profit £1,200. Expenses route £1,920. Allowance is better by £720 of taxable profit.
Example 2: Omar flips electronics on eBay. Receipts £8,000. Fees, returns, postage and tools £3,400. Allowance route taxable profit £7,000. Expenses route £4,600. Expenses are better.
How WeCalculate models it
We take your turnover and expenses at face value, apply a £1,000 cap to the allowance, and compare profits. We do not apportion mixed personal/business use, CIS deductions, or loss relief elections. Results are for tax year 2026/27 education only.
Platform fees, postage and what usually counts
Marketplace sellers typically look at final-value fees, promoted listing costs, payment processing charges, postage charged to you (not necessarily postage charged to the buyer), mailers, bubble wrap, and a share of internet and phone costs if you can justify business use. HMRC expects a reasonable basis. Wholly private clothing sold once is different from inventory you bought intending to resell.
If you use a car for collections and drop-offs, approved mileage rates are often cleaner than actual running costs for small traders. Keep a simple mileage log with dates and purpose. Parking and congestion charges tied to trading journeys may also be relevant when you claim expenses instead of the allowance.
Stock and the accounting basis
Buying stock is not the same as an immediate expense in every accounting method. Cash basis for small businesses can simplify timing, but you must still follow the rules that apply to your election. The trading allowance does not magically convert unsold inventory into a deduction — it simply replaces expense claims with a flat £1,000 when you choose that route.
Seasonal sellers and tax years
The UK tax year runs 6 April to 5 April. A huge December on eBay and a quiet spring can still push you over £1,000 receipts for the year. Check the tax year of each payout, not just the calendar year on your marketplace dashboard. Some platforms report calendar totals that do not match HMRC periods.
When the allowance is the wrong tool
If you have a trading loss you want to use against other income, claiming the allowance may be unhelpful because you are not computing a loss in the usual way. If you expect rapid growth and want clean books for a loan or visa application, full expense records from day one can be wiser even when the allowance would shrink this year’s tax.
Step-by-step filing mindset
- Total all trading receipts for 6 April–5 April.
- List allowable expenses you could evidence.
- Compare allowance method versus expenses method.
- Check connected-party and other SA triggers.
- File on time if a return is required; pay any tax by the deadline.
WeCalculate only automates steps 1–3 as an estimate. Steps 4–5 remain your responsibility with HMRC guidance.
Source: Tax-free allowances on property and trading income (GOV.UK).