HMRC Trading Allowance 2026 — What Every UK Reseller Needs to Know

Disclaimer: This is general guidance only, not financial or tax advice. Consult a qualified accountant for advice specific to your situation.

If you sell on eBay, Vinted, Facebook Marketplace, or any other platform in the UK, there is one tax rule you absolutely need to understand: the HMRC £1,000 trading allowance.

Get it right and you could be selling without any tax liability at all. Get it wrong and you could face a fine, a backdated tax bill, and a very awkward conversation with HMRC.

This guide explains exactly how the trading allowance works in 2026, what has changed, and what UK resellers need to do to stay compliant.

What is the HMRC Trading Allowance?

The trading allowance is a £1,000 annual tax-free amount that HMRC gives every UK individual who earns money from self-employment, casual trading, or selling goods online.

The trading allowance is £1,000 for the 2026/27 tax year. It means you can earn up to a total of £1,000 from self-employment or miscellaneous activity in a tax year and you will not need to tell HMRC about it or pay any tax on the income.

In plain English: if your total selling income across all platforms is under £1,000 in a tax year, you do not need to register for Self Assessment, file a tax return, or pay any tax on that income.

The Most Important Rule Everyone Gets Wrong

The trading allowance applies to your gross income before deducting any costs.

For example if you have business income of £1,500 in a tax year, you will need to register with HMRC and submit a Self Assessment tax return, even if you have £700 of expenses which reduces your profit down to £800.

This catches resellers out all the time. The £1,000 limit is based on what you received — not what you actually made after costs.

Example:

• You sell £900 of items on eBay. Total gross income: £900. Under £1,000 — no tax required.
• You sell £1,200 of items on eBay. You spent £600 buying them. Gross income is £1,200 — over £1,000 — you must register and file a return, even though your profit was only £600.

What Counts as Gross Income?

Everything you receive from buyers across all platforms combined:

• eBay sales
• Vinted sales
• Facebook Marketplace sales
• Depop, Etsy, any other platform
• Car boot sales (if you keep records)

What Happens When You Go Over £1,000?

You have two options when your gross trading income exceeds £1,000:

Option 1 — Claim the trading allowance

Deduct £1,000 from your gross income and pay tax on the remainder. Simple — no receipts needed.

Option 2 — Claim your actual expenses

Deduct your real costs — what you paid for items, packaging, mileage, platform fees — and pay tax on the actual profit.

You cannot claim both. It is one or the other, and you need to choose the option that saves you the most tax.

For most small side hustles with minimal expenses, the trading allowance is simpler.

For most resellers, Option 2 saves more money because your actual costs (buying stock) are usually higher than £1,000. But you need proper records to claim expenses.

The New £3,000 Rule — What It Means and What It Doesn't

You may have seen headlines about a £3,000 threshold. Here is exactly what is changing and what is not:

Within this parliament, which is by the end of 2029, the threshold for filing a Self Assessment tax return for trading income will rise from £1,000 to £3,000. This creates a situation where if you earn under £1,000 there is no tax owed and no requirement to declare it. If you earn between £1,000 and £3,000 tax may still apply on profits but you can report the income using a simplified online service rather than completing a full tax return. If you earn over £3,000 you must register for Self Assessment and complete a tax return.

Making Tax Digital — What Resellers Need to Know for 2026

From April 2026, if your combined gross income from self-employment and property exceeds £50,000, you must keep digital records and file quarterly updates with HMRC using MTD-compatible software. From April 2027, this threshold drops to £30,000.

For the vast majority of resellers reading this, MTD does not apply yet — the £50,000 threshold is high. But if your reselling is growing fast, this is worth being aware of.

When to Register for Self Assessment

If your gross trading income goes over £1,000 in any tax year you must:

1. Register for Self Assessment at gov.uk/register-for-self-assessment
2. Do this by 5 October following the end of the tax year in which you went over
3. File your tax return by 31 January the following year
4. Pay any tax owed by the same 31 January deadline

For the 2025/26 tax year (6 April 2025 to 5 April 2026): register by 5 October 2026, file and pay by 31 January 2027.

Am I Trading or Just Decluttering?

HMRC distinguishes between:

Selling personal belongings — items you already owned and no longer need. Generally not trading income and not subject to the trading allowance rules.

Trading — buying items with the intention of selling them for profit. This is trading income and the allowance applies.

If you are buying items at car boots, charity shops, or clearances specifically to resell, that is trading. If you are selling your old clothes or unwanted gifts, that is generally decluttering.

The test HMRC uses is intent — did you buy it to sell it?

Keeping Records

Whether you are under or over the allowance, keeping basic records is good practice:

• What you sold and for how much
• What you paid for each item
• Platform fees paid
• Postage costs
• Date of each sale

Good records mean you can always prove your income was under £1,000 if HMRC asks, and claim the right expenses if you go over.

Quick Reference Summary

This article is for general guidance only. Tax rules can change and your personal situation may differ. Always consult a qualified accountant or HMRC directly for advice specific to you. FlipIQ is not a tax adviser. The tax summary feature in FlipIQ is a guide only.