Do I need to register as self-employed if I earn under £1,000?
If your gross trading income is £1,000 or less in a tax year, you usually do not need to register as self-employed just because of that income. The key word is gross. The £1,000 test looks at income before deducting expenses, not profit.
GOV.UK explains that you must register as a sole trader if you earn more than £1,000 in a tax year from self-employment. It also explains that people starting a new self-employed business with expected annual gross income of £1,000 or less may not have to register for Self Assessment. You can check the official position in GOV.UK’s guide to registering as a sole trader and its guidance on tax-free allowances for trading income.
That sounds simple, but the grey areas matter. Online selling, casual freelancing, tutoring, delivery work, content creation and one-off side projects can all raise different questions.
What is the £1,000 trading allowance?
The trading allowance is a tax-free allowance for small amounts of trading income. It can cover up to £1,000 of gross trading income in a tax year.
Merranti’s trading allowance guide explains that the allowance applies to gross trading income, not profit. That means someone earning £950 from occasional freelance work may be covered by the allowance, but someone earning £1,200 with £500 of expenses has still gone over the £1,000 gross income limit.
This is one of the most common mistakes. People often think the rule applies to profit after costs. It does not.
Examples of income that may be trading income
Trading income can include money from selling goods or services where there is a commercial activity.
Examples may include:
- freelance design or writing
- tutoring or coaching
- selling handmade products
- delivery driving
- paid content creation
- selling digital products
- casual consulting
- gardening, cleaning or handyman work
- buying and reselling items for profit
Merranti’s Self Assessment registration guide covers several of these grey areas, including side hustles, online sales, odd jobs and casual trading.
The key question is whether you are simply selling personal items occasionally, or whether you are carrying out a trade. Selling your old clothes once is not the same as regularly sourcing stock to sell at a profit.
What if I earn exactly £1,000 or less?
If your gross trading income is £1,000 or less and you have no other reason to complete a tax return, you may not need to register for Self Assessment.
GOV.UK’s trading allowance guidance explains that if you are starting a new self-employed business and expect annual gross income of no more than £1,000, you may not have to register for Self Assessment.
However, you should still keep basic records. GOV.UK’s sole trader setup guidance says that when you start trading, you must keep records to help work out your profit or loss for your tax return. GOV.UK sets this out in its sole trader step-by-step guide.
Even if you do not need to file, records help prove why you did not register.
What if I earn more than £1,000?
If your gross trading income is more than £1,000 in a tax year, you usually need to register for Self Assessment as a sole trader.
GOV.UK explains this in its register as a sole trader guidance. The tax year runs from 6 April to 5 April, so the timing of income matters.
Once your income exceeds £1,000, you normally have two choices:
- claim the £1,000 trading allowance and pay tax on the excess, or
- ignore the allowance and claim actual allowable expenses instead.
Merranti’s £1,000 trading and property allowances guide explains the difference between using the allowance and claiming actual expenses. This is important where your expenses are high.
When registering voluntarily may still make sense
Even if your income is below £1,000, there are situations where you may still want or need to register.
GOV.UK’s trading allowance guidance says you must register and declare income if you have made a loss and want to claim relief, want to pay voluntary Class 2 National Insurance contributions, want to claim Tax-Free Childcare based on self-employment income, or want to claim Maternity Allowance based on self-employment.
This is where “saving admin” can sometimes create a different problem.
Merranti’s article Why Saving Tax Could Cost You Your State Pension explains why low-income self-employed people should not only focus on the trading allowance. National Insurance credits and future State Pension entitlement may also matter.
What if I already complete a Self Assessment tax return?
If you already complete a tax return for another reason, the position can be different.
For example, you may already file because you are a landlord, higher earner, company director, investor, or someone with untaxed income. In that case, small trading income may still need to be included on the return, even if you use the trading allowance.
Merranti’s Self Assessment tax return guide is useful here because it sets out the common reasons someone may need to file a tax return beyond self-employment.
If you are already registered for Self Assessment but have started trading, GOV.UK says you may need to register again as a sole trader so that the correct Self Assessment and National Insurance records are in place. GOV.UK explains this in its guide to registering as a sole trader.
Online selling: hobby or trade?
Online selling is one of the most common areas of confusion.
If you sell personal possessions occasionally, that is not automatically self-employment. But if you buy goods to resell, make products to sell, advertise services, take regular orders, or sell through a platform with profit in mind, HMRC may view that as trading.
The £1,000 trading allowance can still help, but only if your gross trading income is within the limit. Once income goes above £1,000, you should check whether registration is needed.
Merranti’s Self Assessment registration guide covers online sales and side hustle grey areas in more detail.
Do I need to keep records if I am under £1,000?
Yes, basic records are still sensible.
You should keep:
- dates of sales or payments received
- platform statements
- invoices issued
- bank or PayPal records
- receipts for expenses
- notes explaining whether items were personal sales or trading stock
This protects you if HMRC later asks why income was not reported.
The record does not need to be complicated. A simple spreadsheet or export from the platform may be enough for small activity, but it should be clear and complete.
What is the registration deadline?
If you need to complete a tax return and have not sent one before, you must normally tell HMRC by 5 October after the end of the relevant tax year. GOV.UK explains the registration process in its guide to registering for Self Assessment.
For example, if you go over the trading allowance in the 2025/26 tax year, which runs from 6 April 2025 to 5 April 2026, the registration deadline would normally be 5 October 2026.
Do not wait until January to decide whether registration was needed. By then, the registration deadline may already have passed.
Speak to Merranti if you are unsure
The £1,000 trading allowance is useful, but it is not a blanket exemption for every side hustle. The correct answer depends on your gross income, the type of activity, whether you already file a tax return, whether you want to claim losses or benefits, and whether National Insurance matters.
Merranti’s trading allowance guide is a useful starting point, and its wider Self Assessment registration guide covers grey areas such as online sales, freelance work, casual income and property income.
If you are unsure whether your side income needs to be declared, contact Merranti Accounting before the Self Assessment registration deadline. Merranti’s contact page lists support for Self Assessment and sole traders, including options for simple Self Assessment returns and sole trader bookkeeping.
