Around 400,000 UK individuals could save an average of £380 a year under a new tax change announced in the 2026 Budget.
The change will increase the Trading Allowance from £1,000 to £3,000 from 6 April 2027. The allowance covers certain trading and miscellaneous income, including small-scale goods or services.
However, the £380 figure is important to understand. This is not a £380 cash payment being sent to bank accounts. It is the estimated average reduction in tax bills for around 400,000 people who could benefit from the higher allowance.
Who Could Benefit?
The change could help people earning extra income from activities such as selling goods, providing services or running a small side business.
Under the new rules, the amount covered by the Trading Allowance will increase to £3,000.
The Government estimates that up to 1.4 million individuals could potentially benefit through either a lower tax bill or reduced administrative requirements.
Around 100,000 people are also estimated to no longer need to report their trading income to HMRC because of the increased reporting threshold.
When Does the Change Start?
The new £3,000 Trading Allowance is due to take effect from 6 April 2027, covering the 2027/28 tax year onwards.
Until then, the existing £1,000 allowance remains in place, so people earning trading or miscellaneous income should continue to follow the current HMRC rules.
Check If You Could Benefit
If you earn additional money outside your main employment, it could be worth checking whether the new allowance applies to your circumstances.
The key point is that the £380 figure is an estimated average tax saving, rather than a universal payment.
People with side income should also remember that the allowance applies to qualifying trading or miscellaneous income and does not mean all forms of income become tax-free.
The new rules are designed to reduce tax and paperwork for people with smaller-scale trading activities from April 2027.