So You've Exceeded the £1000 limit...What Happens Next?
- Nov 3, 2025
- 2 min read
You must register for self-assessment.
The £1,000 trading allowance is an alternative to claiming actual expenses, not a tax-free “first £1,000 chunk.”
That means:
If your total trading turnover (not profit) is £1,000 or less → you can ignore it completely — no need to register or report.
If your turnover is more than £1,000 → you must register and declare all of it, not just the amount over £1,000.
Then you get two ways to calculate your taxable profit:
Option | Description | When it helps |
Option A: Actual expenses | Report all your income and subtract real business costs (fees, shipping, stock, etc.) | If your expenses are more than £1,000 |
Option B: Trading allowance | Ignore all actual costs and instead just deduct a flat £1,000 from your total income | If your expenses are less than £1,000 |
So once you pass £1,000 turnover, you don’t just pay tax on the bit over — you’re now declaring the full trading income, and you choose whichever deduction method gives you the smaller tax bill.
Example
Trading Income | Actual Expenses | Option A (Profit) | Option B (Profit after £1k allowance) | Which wins? |
£800 | £300 | £500 | £0 | Under £1k → No tax |
£1,500 | £200 | £1,300 | £500 | Option B (lower profit) |
£4,000 | £1,500 | £2,500 | £3,000 | Option A (lower profit) |
Selling personal possessions (‘own items’) — even if total sales exceed £1,000 — is not classed as trading.The £1,000 trading allowance applies only to trading income (items bought or made to resell).
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