A Trading Allowance is a tax relief provided by the UK Government to small business and self-employed individuals, who earn income from selling goods or providing services. The trading allowance allows these individuals to earn a certain amount of money each year without paying tax on it.

The trading allowance was introduced in the 2017 budget and allows individuals to earn up to £1,000 per year tax-free from selling goods or providing services, such as, selling goods on e-commerce platforms like eBay and Etsy, freelance work, renting out a property for business use or renting out a parking space. This relief is intended to reduce the administrative burden for small businesses and the self-employed, as they would no longer need to register for VAT or keep detailed records of their turnover, as long as their turnover is below £1000.

It's important to note that if the income earned exceeds £1,000 per year, the individual will be subject to income tax on the excess amount. Also, other taxes such as National Insurance Contributions still need to be paid, and if your income from trading exceeds £1,000 a year, you may have to register for self-assessment and file a tax return.