UK Trading Allowance Triples to £3,000
The UK government has announced plans to triple the tax-free trading allowance from £1,000 to £3,000 from 6 April 2027, potentially benefiting thousands of people running small online businesses, including dropshipping and print-on-demand ventures.
Confirmed in the Autumn Budget on 28 October 2026, the change will also increase the Self Assessment trading income reporting threshold to £3,000. HMRC estimates that up to 1.4 million individuals could benefit through lower tax bills or reduced administration.
However, there’s an important distinction that new ecommerce entrepreneurs need to understand. The allowance applies to gross trading income, not profit, and using it means you cannot also deduct your normal business expenses against that income.
For dropshippers paying suppliers, ecommerce platform subscriptions, advertising costs and transaction fees, claiming actual allowable expenses may still be the better option.
Continue for how the increased allowance works, when the changes take effect and why a larger tax-free allowance doesn’t necessarily mean a bigger saving for every online seller.
