Hundreds of thousands of people are set to keep more of their money under a tax change announced by Prime Minister Andy Burnham.
The measure, revealed as part of last week’s Budget on October 28, will triple the tax-free Trading Allowance from £1,000 to £3,000 starting on April 6, 2027.
Mr Burnham said the change would save approximately 400,000 households an average of £380 on their annual tax bills.
The move is designed to benefit anyone generating additional income outside their main job, whether through selling goods online, tutoring, dog walking or other informal work.
Until now, anyone whose side earnings exceeded £1,000 per year was required to pay tax on that income and file a Self Assessment return with HMRC.
Under the new rules, those earning between £1,000 and £3,000 from side activities will no longer need to complete a Self Assessment tax return.
However, HMRC has confirmed they must still notify the tax office about their earnings. A new online reporting tool is being developed to simplify this process, with a launch expected by 2029.
Anyone whose side income tops £3,000 will still be required to file a full Self Assessment return as before.
Mr Burnham said: “If you’ve got a <a re a keen Vinted seller, maybe you do some dog walking or pet-sitting in your spare time, maybe you're a teacher doing some extra tutoring."
He added: “It’s a small measure, but one that makes it easier to earn a bit extra or give that business idea a go. Your <a
The trading allowance announcement is the latest in a string of high-profile but relatively modest policies from Mr Burnham since he replaced Keir Starmer as Prime Minister.
Last month, he unveiled a crackdown on passengers who play loud music on public transport without headphones.
In July, he scrapped VAT on electricity bills, cutting them by roughly £45 a year, and ahead of the Budget he removed tariffs on more than 100 products, including baked beans and chocolate, saving households around £21 annually on groceries.
Critics have questioned whether these measures amount to a serious governing agenda.
Writing in The Spectator, Jawad Iqbal, a broadcaster and former visiting senior fellow at the LSE’s Institute of Global Affairs, said: “Andy Burnham has an uncanny knack of saying things that sound good, determined to show voters that he is a leader who really cares.”
Mr Iqbal added that voters needed to hear far more from the Prime Minister about “his detailed answers to the big and important challenges facing the country.”
The announcement also drew a sharp response from members of the public on social media.
Ed Broughton, who is self-employed, questioned the fairness of the policy, asking: “What’s the difference between someone having a side hustle and me putting in an extra few hours every weekend?”
Others argued the government should simply raise the personal tax allowance instead. Luke Lancaster asked why the threshold was not increased by £3,000 “so people don’t have to do <a
Andrew Partlett echoed that view, writing: “Surely you could just raise the income tax threshold if you really wanted to make a difference.”
Mr Burnham, meanwhile, has promised a 10-year plan for Britain “coming soon.”
On Sunday, he said last week’s Budget was “an important milestone” towards delivering the bigger changes he wants to make.
