Allowance or expenses?
Over £1,000? You can take off the £1,000 allowance or your actual costs, not both. See which gives the smaller figure on your return.
Stock, materials, postage, selling fees, equipment, the business share of your phone. Not personal spending.
Questions people ask
Can I use both the allowance and my costs?
No. If your trading income is over £1,000, you take off either the £1,000 allowance or your actual costs. You choose when you file.
What counts as a cost?
Things wholly for the side hustle, such as stock, materials, postage, selling fees, equipment and the business share of your phone. Personal spending doesn't count. Search 'expenses if you're self-employed' on gov.uk for the full list.
Is the figure the tax I'll pay?
No. It's the figure that goes on your return for this income. Your tax depends on your total income and allowances.
Sources
- gov.uk: Tax-free allowances on property and trading income
- gov.uk: Expenses if you're self-employed
Checked 5 October 2026. Explains how the rules work. Not tax advice for your situation.
Let the tracker do this as you go.
The free Starter Pack tracker works out both routes live as you log sales and costs. Plus a reminder before each deadline.