In a significant move to modernise the tax system, HMRC has announced a major increase to the trading income allowance, freeing hundreds of thousands of Britons from the burden of filing a Self-Assessment tax return.
A Boost for Britain's Side Hustlers
The Exchequer Secretary to the Treasury, James Murray, has confirmed that the Income Tax Self Assessment (ITSA) reporting threshold for trading income will be raised from £1,000 to £3,000. This change, set to be implemented within the current parliament, is a core part of a broader package to transform HMRC into a quicker and fairer organisation.
The policy is designed to support the UK's growing army of entrepreneurs and side hustlers, from those selling vintage clothes and offering dog-walking services to content creators and taxi drivers.
Who Benefits from the Change?
This reform will have a direct and positive impact on an estimated 300,000 taxpayers. Of this group, approximately 90,000 individuals will find they have no tax to pay and will be completely freed from the obligation to report their trading income to HMRC in the future.
For the remaining taxpayers who still owe a small amount, the process will be vastly simplified. Instead of navigating the full Self-Assessment system, they will be able to pay what they owe through a new, straightforward online service. This aligns the trading income threshold with the recently updated thresholds for property and other forms of taxable income.
Driving Efficiency and Growth
Announced on 22 November 2025, this initiative reflects the government's commitment to its Plan for Change, focusing on driving efficiency and reducing administrative waste. The goal is to remove unnecessary worry for customers and create better conditions for their small businesses and side projects to flourish.
"Taking hundreds of thousands of people out of filing tax returns means less time filling out forms and more time for them to grow their side-hustle," said James Murray. He emphasised that the changes are designed to make it easier for Brits to capitalise on their entrepreneurial spirit, whether they are "trading old games or creating content on social media."
This decisive step is expected to streamline the tax system for the self-employed and part-time traders, allowing them to focus their energy on what they do best: building their enterprises.
