UK Budget triples the trading allowance to £3,000 and extends parental pay to self-employed fathers and partners

The UK Budget published on 28 October 2026 is tripling the Trading Allowance from £1,000 to £3,000 from 6 April 2027. The allowance lets individuals earn a small amount of self-employed or casual income without reporting it to HMRC or paying tax on it.

The Budget also extends parental pay to self-employed people for the first time: from April 2029, eligible self-employed fathers, partners and adopters in Great Britain will be able to access it. The Budget document does not set out the weekly amount. From the same month, people who already make Payments on Account through Self Assessment will make smaller, more regular payments rather than two large ones.

Why this matters

If you have a small side income from freelance work alongside a job, the threshold below which you need not declare it rises to £3,000 a year from the 2027/28 tax year. That makes it easier to test freelancing before registering as self-employed. The parental pay change closes a gap that has long put self-employed fathers and partners at a disadvantage against employees, although it is more than two years away and depends on legislation still to come.

If you live outside the UK, these measures generally only matter if you are UK tax resident or have UK-source self-employed income. Check your own position before relying on the allowance.

Context

Making Tax Digital for Income Tax still extends to sole traders and landlords with qualifying income over £30,000 from 6 April 2027. The Budget did not change that date.