As announced in Budget 2026, the government has announced plans to increase the Trading and Miscellaneous Income Allowance from £1,000 to £3,000 from April 2027.

Under the proposed changes, legislation will be introduced through Finance Bill 2026/27 to raise the existing £1,000 allowance to £3,000. This means eligible individuals will be able to earn up to £3,000 in qualifying trading and miscellaneous income without needing to declare or pay tax on that income, provided the allowance covers all their relevant income before expenses.

The change aims to simplify the tax system, reduce administrative burdens and provide greater flexibility for individuals earning income from trading and miscellaneous activities.

This measure is expected to make tax reporting simpler for people with small side businesses, freelance work or occasional trading activities.

Property allowance

In addition to the above trading and miscellaneous income allowance, individuals are eligible to claim up to £1,000 a year in tax-free allowances for property income. If your annual gross property income is £1,000 or less, from one or more property businesses, you don’t have to tell HMRC or declare this income on a tax return.

Gross income means the total amount received before any allowances or expenses are taken off.

You must keep records of this income. This is known as ‘full relief’.

If your annual gross property income, from one or more properties, is more than £1,000 you can use the tax-free allowances, instead of deducting any expenses or other allowances. If your expenses are more than your income it may be beneficial to claim expenses instead of the allowances.

If you use the allowances you can deduct up to £1,000, but not more than the amount of your income. This is known as ‘partial relief’.

If you own a property jointly with others, you’re each eligible for the £1,000 allowance against your share of the gross rental income.