Small amounts of property and trading income

There are two separate £1,000 tax allowances for property and trading income that have been available to taxpayers since April 2017.

The £1,000 exemptions from tax apply to:

  • Taxpayers who make up to £1,000 income from self-employment, casual services or hiring personal equipment. This is known as the trading allowance.
  • The first £1,000 of miscellaneous income for income from property. For example, from renting a driveway. This is known as the property allowance. The allowance is not available on income from letting your own home where a separate relief may be available using the Rent a Room Scheme.

Where each respective allowance covers all the individual’s relevant income (before expenses), the income is tax-free and does not have to be declared. Taxpayers with higher amounts of income will have the choice, when calculating their taxable profits, of deducting the £1,000 allowance from their income, instead of deducting the actual allowable expenses.

There are restrictions, if the income or rents are generated by dealings with companies or partnerships of which the recipient is a participator or partner.

Posted in Income Tax

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