Tax Free Allowances on Property and Trading Income - Tax Tip Tuesday 30

Since 6th April 2017, you can receive up to £1,000 each tax year from property and/or trading income without paying tax. This income is covered by the property and/or the trading allowance, if you have both types of income, you will get a £1,000 allowance on each.

If your annual gross property and/or trading income is £1,000 or less, from one or more properties/trades then you do not have to tell HMRC or declare this income on your tax return.

If your annual gross trading and/or property income is more than £1,000 you can use the £1,000 as a tax-free allowance, instead of deducting any expenses or other allowances although you cannot put yourself in a loss making position by using the tax free allowance so in that case you would claim partial relief.

You would generally only claim the £1,000 tax-free allowance if actual expenses are less than £1,000. It is worth noting that the trading allowance is not restricted for short periods of trading.

There are circumstances where you may wish to complete a tax return despite your income being under £1,000 such as claiming loss relief or wishing to pay voluntary Class 2 National Insurance.

You cannot use the allowances if your income is from a company you or someone connected to you owns or controls, a partnership where you or someone connected to you are partners or if the income is from your employer or your spouse’s employer.

Always keep a record of your income, even if you are utilising the above allowances.





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