eBay, Vinted, Depop and Etsy have joined up with three business groups to call on chancellor Rachel Reeves to increase the threshold at which self-employed individuals need to register for Self Assessment and pay tax.
In an open letter, the organisations said raising the threshold from £1,000 to £3,000 would be a “pro-growth measure” to include in the Autumn Budget on 26 November.
The limit hasn’t changed since it was introduced in 2017 which the letter said meant its value has been eroded in real terms due to inflation and rising costs.
The signatories said for those currently claiming the trading allowance, an increase would provide them with an extra £400.
A higher allowance would also support business incubation by removing unnecessary tax and reporting burdens,” they said, and enable individuals to test business ideas, build confidence and skills, and nurture a side hustle into a full-time business.
Eve Williams, general manager of eBay UK, said:
“As the chancellor’s November Budget approaches, with expectations of tax increases on the horizon – the government and the country face a critical choice. Tax rises may indeed be inevitable to balance the books. But if we are to avoid stagflation and a return to austerity, we cannot rely on revenue raising measures alone.
“Eight years ago, the last Conservative government introduced a £1,000 trading allowance to help entrepreneurs take their first step onto the enterprise ladder. It was a smart policy – but like many other tax allowances, its value has been quietly eroded by inflation.
“Trebling this allowance would not only put an extra £400 into the pockets of basic-rate taxpayers but also give fledgling businesses more capital to reinvest – strengthening growth and, ultimately, boosting the Treasury’s revenues in return.”
Raising the trading allowance: The letter in full
Dear chancellor,
As representatives of UK businesses, enterprise organisations and entrepreneurs we are writing to you to ask that you consider, as part of the forthcoming Autumn Budget, raising the UK’s trading allowance from its current level of £1,000 to at least £3,000 per annum as part of any wider package of pro-growth measures.
At a time when economic inactivity remains a pressing concern for the UK labour market, and with households still grappling with the effects of the cost of living crisis, the case for incentivising low-barrier entrepreneurial activity to boost economic growth has never been stronger. Given that SMEs are the lifeblood of the UK economy and the vital engine for future economic growth, it is also imperative that we reverse the alarming decline reported by ONS in the number of private businesses in the economy compared to 2020.
The existing £1,000 threshold is designed to provide limited tax relief to individuals who generate income through small-scale trading or freelance work. However, the allowance has remained static since its introduction in 2017 with inflation and rising costs eroding its value in real terms.
Raising the threshold to £3,000 would send a strong signal that the UK is serious about fostering a modern entrepreneurial culture and ‘making work pay’. Side hustles — often the first step toward fully fledged start-ups — offer a crucial on-ramp to business creation, especially for underrepresented groups, career returners, students, and those seeking to supplement income during periods of part-time work or economic transition.
- For those currently claiming the trading allowance, this would put an extra £400 back into the pockets of basic rate taxpayers and working families across the country.
- A higher Trading Allowance would support business incubation by removing unnecessary tax and reporting burdens.
- It would enable individuals to test business ideas, build confidence and skills, and nurture their side hustle into a fully fledged start-up.
- It would also provide nascent entrepreneurs with additional finance to reinvest in and grow their businesses further – which would be the most common use of the extra income.
- Finally, it would be consistent with the government’s already stated aim to raise the threshold for Self Assessment reporting from £1,000 to £3,000, benefitting 300,000 small businesses.
By lifting the trading allowance to £3,000, the government can unlock latent entrepreneurial potential across the country, support low barrier entrepreneurial activity and help generate the growth and wealth that our economy so desperately needs. We therefore hope that you will give our proposal the serious consideration it deserves.
Yours sincerely,
- Eve Williams, general manager, eBay UK
- Adam Jay, CEO, Vinted Marketplace
- Peter Semple, chief executive officer, Depop
- Jeffrey Zubricki, global head of advocacy and public policy, Etsy
- Craig Beaumont OBE, executive director, Federation of Small Businesses
- Antony Walker, deputy CEO, Tech UK
- Daniel Woolf, head of government relations and policy, Enterprise Nation