£1,000 trading allowance or expenses: which is better?

Short answer: You can either deduct the £1,000 trading allowance from your sales or deduct your actual costs (stock, fees, postage, packaging), but not both. Use whichever gives you the lower taxable profit: low-cost sellers usually win with the allowance, stock-heavy resellers with expenses.

How the two options work

• Trading allowance: taxable profit = sales minus £1,000. You don't need receipts for costs.
• Actual expenses: taxable profit = sales minus your real costs. You need records for those costs.

You can't use both against the same income. You can choose differently each tax year.

Example 1: low costs, the allowance wins

Example 2: stock-heavy, expenses win

What costs can resellers usually claim?

• What you paid for the stock you sold
• Platform and payment fees you pay as the seller
• Postage you pay, and packaging
• Other costs used only for your selling, such as a label printer

Keep receipts, or a dated note of where and when you bought stock if there's no receipt.

Rule of thumb

If your costs for the year are under £1,000, the allowance usually wins. Over £1,000, claiming expenses usually wins. Either way, if your sales are over £1,000 you still need to report them through Self Assessment.

Quick questions