Trading allowance calculator, 2026/27
If you have small self-employed or side income alongside a limited company role, the trading allowance can wipe out the tax due without any bookkeeping. Enter your income and expenses to see which method leaves you better off for 2026/27.
The trading allowance calculator runs on the rates and thresholds HMRC has published for the 2026/27 tax year, so the figures you see reflect the position your company is actually filing on rather than a historic set of bands. Change any input and the result recalculates immediately, with no sign-up and nothing sent anywhere.
If you are a director of a UK limited company, use it as a first look before a decision rather than as the decision itself. The trading allowance is £1,000 for 2026/27 and can be deducted from gross trading or miscellaneous income instead of actual expenses, but not as well as them. Real company positions bring in other income, reliefs, group structures and prior year adjustments that a single page of inputs cannot see, which is why the workings are written out below under corporation tax & limited company. Read those, then check the numbers against your own accounts, and speak to us if anything looks materially different from what you expected.
Last reviewed 12 September 2026 for the 2026/27 tax year. Reviewed by Waqas Sagar, Member of ICAEW, Fellow of ACCA, Fellow of AAT.
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Result, 2026/27
Tax due using the trading allowance
Tax due deducting actual expenses
Better method for you
Taxable profit (better method)
Illustration only, figures are based on the rates you have selected and the information entered. Please check your own position with us before acting.
Estimates for the 2026/27 tax year using published GOV.UK rates. Switch between 2026/27 and 2025/26 above.
How this is calculated
The trading allowance lets you deduct up to £1,000 from gross trading or miscellaneous income instead of your actual expenses, whichever is more beneficial. If your gross income for the year is £1,000 or less, the whole amount can be covered by the allowance and no tax is due on it.
Where income exceeds the allowance, you choose each tax year between deducting the flat allowance or your actual, receipted expenses, whichever leaves less taxable profit. This calculator works out both and applies your marginal income tax rate to show which is cheaper.
The allowance cannot be used to create a loss. If your actual expenses genuinely exceed your income, you must use the actual-expenses method to record a loss that can be carried forward against future profits from the same trade, since the flat allowance cannot take taxable profit below nil.
Who this helps
The trading allowance suits directors with small self-employed side income, casual freelance work, selling handmade goods, or occasional consultancy, alongside their main limited company role, where keeping detailed expense records for a small amount of income is not worth the effort.
It also removes a self assessment registration requirement in many cases where trading income alone is below the allowance, though other income (such as dividends above the dividend allowance, or property income) can still create a filing obligation regardless.
Points to check each year
You cannot claim the trading allowance against income from your own limited company (such as salary or dividends); it only applies to genuinely separate trading or miscellaneous income, most often self-employment outside the company.
If you have both a trade and property income, you may be able to claim the trading allowance and the separate £1,000 property allowance in the same year against each source respectively, so check both where you have income of each type.
What this means for your company
Treat the result as a planning figure for the 2026/27 tax year. If it changes what you were about to do, take a director's salary, a dividend, a large asset purchase or a filing decision, check it against your own accounts first. We can review the position with you and confirm the tax treatment before you commit.
Frequently asked questions
What is the trading allowance for 2026/27?
The trading allowance is £1,000 for 2026/27, deductible from gross trading or miscellaneous income instead of actual expenses.
Do I need to register for self assessment if my income is below the trading allowance?
Generally no, if your only relevant income is trading or miscellaneous income at or below the allowance you usually do not need to register or file for that income alone, though other income sources can still create a filing requirement.
Can I use the trading allowance and claim expenses too?
No, you must choose one or the other for that source of income each tax year. You cannot deduct the flat allowance on top of your actual expenses; it is the allowance or the expenses, whichever is lower taxable profit.
Can the trading allowance create a loss?
No. If your expenses would otherwise exceed your income, you need to use the actual expenses method rather than the trading allowance, since the flat allowance cannot reduce taxable profit below nil or produce a carried-forward loss.
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