Raising the trading allowance: Why Enterprise Nation signed an industry letter

Enterprise Nation has joined eBay, Vinted, Depop, Etsy, the Federation of Small Businesses and techUK in writing to the Chancellor of the Exchequer ahead of the Autumn Budget.

Together, we're calling for the UK's trading allowance to be raised from £1,000 to £3,000 per year.

Introduced in 2017, the allowance gives people tax relief on small amounts of trading income. But it hasn't been uprated since, while prices have risen by more than 30% over the same period.

Its real value has been eroded, and it's no longer effective in encouraging people to take their first steps into business.

In 2024, new rules made it compulsory for selling platforms like Etsy, eBay, Amazon and Airbnb to share how much income sellers make with HMRC.

That was followed up earlier this year with a new campaign to remind side hustlers of their responsibilities.

Why change is needed now

Recent data underlines the pressure that the smallest businesses are facing:

• The UK private sector business population stood at 5.5 million in early 2024, down 8.1% since 2020, with the steepest falls among businesses with no employees.

• Between 2023 and 2024 alone, the number of businesses fell by a further 56,000.

• Inflation remains elevated: The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 4.1% in the 12 months to August 2025.

• Prices have risen by about 34.4% since 2017, meaning the £1,000 trading allowance buys far less today than when it was introduced.

For lower earners and people who are self-employed, frozen thresholds are biting hardest. Side incomes are often used to pay bills or cover essentials, but the current £1,000 allowance no longer provides meaningful relief.

How raising the allowance would help

Here's what lifting the trading allowance to £3,000 would do:

• Offset rising costs: Giving small traders and side hustlers more tax-free income when inflation is squeezing margins.

• Support non-employing businesses: The group most at risk of closure, and where the steepest declines have been recorded.

• Encourage new enterprise: Reducing the worry that a small amount of income triggers complex reporting.

• Make compliance simpler: Since January 2024, new digital platform reporting rules mean marketplaces like eBay and Vinted must collect and share seller data with HMRC, with reports due by 31 January each year.

  This has added new layers of administration for small traders, even when their earnings are modest. Raising the trading allowance would help offset that burden and restore clarity.

• Match the government's own plans: Aligning with the pledge to raise the self-assessment threshold to £3,000, which would give small traders more consistency.

Daniel Woolf, head of policy and government relations at Enterprise Nation, says:

"Enterprise Nation signed this letter because we see every day how side hustles act as the first rung on the entrepreneurial ladder.

"For many people – from students and career-returners to those balancing part-time work – the trading allowance makes the difference between testing an idea and deciding it's not worth the risk.

"But after eight years without change, its value has been eroded by inflation and rising costs. Raising the threshold to £3,000 would restore that support, put more money back into working families' pockets and encourage more people to grow their ideas into fully fledged businesses.

"It's a practical step the government can take now to signal that it backs small business and is serious about making work pay."

The Enterprise Nation view

We see every day how side hustles become start-ups and how low barriers make it easier for people to test ideas, build skills and grow.

Raising the trading allowance would recognise the impact that recent years of inflation have had on small businesses, and restore the policy to its original intent. It's one of the clearest and most tangible ways government can show it backs the next generation of entrepreneurs.