Property Allowance

4th June 2018

The property allowance is a tax exemption of up to £1,000 a year for individuals with income from land or property.

The property allowance applies to relevant property income which includes:

  • Both UK and overseas property businesses.
  • Both commercial and residential letting (but not rent-a-room businesses – see below).Where property income exceeds £1,000, the legislation allows for partial relief.  Effectively, individuals can choose either to:
  • If an individual has more than one property business, for example a UK and an overseas business, then the receipts of both trades are combined with only a single £1,000 allowance available.
  • Deduct their actual property business expenses from their income in the usual way, or
  • Elect instead for the £1,000 property allowance as a deduction from income.Individuals can decide on a year by year basis which approach to take. The best option will depend upon the level of expenses in the property business. Businesses with low outgoings (e.g. a single property with no mortgage and few, if any, repairs) may be better off with partial relief. However, if there is a large revenue expense in the year, for example a one-off repair bill, it may be better to claim actual expenses.You must tell HMRC if you have:
  • If your annual gross property income is £1,000 or less, you won’t need to tell HMRC. If it’s higher, you’ll need to declare your property income.
  • It should be noted that if you claim partial relief you cannot deduct any other expenses, just the £1,000 allowance.
  • gross property income over £1,000 up to £2,500 – contact HMRC
  • property income over £2,500 – register for Self Assessment

You can’t use this allowance on income from letting a room in your own home under the Rent a Room Scheme.

If you use the property income allowances you must still keep a record of your income.

Examples of the records you may need to keep are:

  • copies of your invoices, paper or electronic
  • a record of your income receipts
  • emails confirming income and expenditure
  • bank statements


 
Other items in Blogs
 
Lucy Bayliss
8th January 2020 It’s the final countdown!

There are only 23 days until the self-assessment tax return deadline of 31 January 2020. If your return is not filed electronically by this date, an automatic £100 penalty will be applied. Please note that the deadline for filing a paper tax return was 31 October 2019 and therefore all returns are required to be…

Read More »

Vanessa Pearson
13th December 2019 April 2020 Proposed IR35 changes: Status appeals process

As the planned changes to who determines IR35 status are fast approaching, contractors would be well advised to review their contracts on HMRC’s updated CEST (Check Employment Status for Tax) tool. Having provided answers to questions regarding substitution, control and nature of the work, the updated tool will give HMRC’s view of the workers employment…

Read More »

Ben Kilby
12th December 2019 VAT Surcharge

Have you or your business received one between 23 April 2018 and 31 January 2019?   If so, you may want to check if it has been dated. If it has not been dated you may be in for a refund. Any surcharge liability notice or surcharge liability notice extensions are invalid if they have…

Read More »

Lucy Bayliss
25th November 2019 Don’t let your tax bill affect your festive joy. Instead, spread your tax payments throughout the year!

With the festive period fast approaching, it is easy to lose sight of your self-assessment tax return!   If you are employed or receiving a pension and you file your return before 30 December 2019, you can elect to have your tax collected through ‘Pay As You Earn’ (PAYE) rather than paying one lump sum…

Read More »

Ian Piper
22nd November 2019 2019 Growth: Missing in action?

(Data Source) As another year draws to a close, local SME businesses will be forgiven for looking forward to drawing a line under it. With 2019 sales growth barely nudging 1%, it has been a year of focusing on not slipping backwards, rather than the usual mantra of continually signing up new accounts.  When commentators…

Read More »

Mark Burrows
21st November 2019 Avoiding Self Assessment Tax Scams

HM Revenue & Customs have reminded Self Assessment taxpayers to watch out for fraudsters as the tax return filing deadline of 31 January approaches.   HMRC say they have received nearly 900,000 reports of suspicious phone calls, texts or e-mails from scammers pretending to be the tax authority.  Most of these messages were about fake…

Read More »