Lots of people now earn money outside their main job, whether that is selling online, letting a room or doing a few freelance jobs at weekends. A common worry is what HMRC expects in return. For small amounts, the answer is often nothing at all, but the rules depend on what kind of income it is and how much you earn.
V5 Solutions explains the main tax-free allowances that apply to extra income, using figures for the 2026 to 2027 tax year (6 April 2026 to 5 April 2027), and works through three examples.
Is Selling Your Own Belongings Taxable?
Usually not. Clearing out unwanted possessions, such as clothes, furniture or old phones, is not trading, so there is normally no Income Tax to pay and nothing to report, however many items you sell.
The picture changes if you buy things in order to sell them on at a profit, or make items to sell. That counts as trading and falls under the trading allowance described below.
Digital platforms now report seller details to HMRC each January once someone makes 30 or more sales or receives around £1,700 or more in a calendar year. Being reported does not create a tax bill. It just means HMRC can see the activity. Separately, Capital Gains Tax can apply when you sell a single personal possession for £6,000 or more at a profit, although your own car is normally exempt.
What Is the £1,000 Trading Allowance?
The trading allowance lets you receive up to £1,000 a year in gross income from self-employment, casual services or hiring out personal equipment without paying tax on it. Key points:
- It applies to the total from all such activities combined, not £1,000 per activity.
- It is measured on income before expenses.
- If your trading income is £1,000 or less, you generally do not need to tell HMRC.
- If it is more, you must tell HMRC by registering for Self Assessment no later than 5 October following the end of the tax year, and then choose between deducting the £1,000 allowance and deducting your actual costs.
There are exceptions. For example, you may still need to register if you want to pay voluntary Class 2 National Insurance or need to prove your income for certain benefits. The GOV.UK guidance lists them.
Allowances for Renting Out Space
The property allowance
The property allowance gives you a further £1,000 tax-free for income from land or property, for example letting a parking space or a garage. You can use it alongside the trading allowance, so someone with both kinds of income gets £1,000 for each.
The Rent a Room Scheme
If you let furnished accommodation in your own home, the Rent a Room Scheme gives you a much higher tax-free threshold of £7,500 a year, or £3,750 each if the income is shared. Below the threshold the exemption is automatic. You cannot claim the property allowance on the same income.
Three Worked Examples
Priya sells a sofa she has replaced, some old clothes and a games console online. She makes 35 sales over the year. The platform reports her to HMRC, but because she is selling personal possessions, no tax is due.
Dan has a full-time job and cuts lawns on Saturdays. His customers pay him £900 over the tax year. That is within the trading allowance, so he has no tax to pay and does not need to register.
Leah does freelance proofreading in the evenings and receives £3,200, with £400 of costs. She registers for Self Assessment. Deducting the £1,000 allowance gives a lower taxable figure than claiming her £400 of expenses, so she pays tax on £2,200 at her usual rate.
Other Things to Check Before You Start
- Your employment contract, which may restrict second jobs.
- Your tenancy, mortgage and home insurance, which may require permission for lodgers or parking.
- Benefits. If you receive Universal Credit, extra earnings must be reported and can change your payment.
- Too-good-to-be-true offers. Work-from-home schemes that ask for money upfront are a common fraud, as our article on financial scams to watch for explains.
Once the money starts coming in, give it a job. Our guides to the key numbers in your budget and savings accounts explained set out the options.
This article is general information, not financial advice. For free, impartial help with your own situation, visit MoneyHelper.
