From 6 April 2017 (subject to the passage of the Autumn Finance Bill, when Parliament returns after the summer break), individuals will be able to claim up to £1,000 a year in tax-free allowances for property or trading income. If you have both types of income, you may claim a £1,000 allowance for each.
If your gross trading or property income is below £1,000, and you are not registered for self-assessment, you will not have to declare this income on a tax return. However, you are still obliged to keep a record of this income.
If you are already registered for self-assessment you can claim the allowances by deducting them from your gross property or trading income on your tax return. However, if you claim the allowance you cannot also deduct business or property related expenses. Either you claim the allowance or claim a deduction for expenses incurred, not both.
The property allowance is a tax exemption of up to £1,000 a year for individuals with income from property. If you own a property jointly with others, each joint owner is eligible for the £1,000 allowance against their share of the gross rental income. It is not possible to claim the allowance on income from letting your own home under the “rent-a-room” scheme.
The trading allowance is a tax exemption of up to £1,000 for individuals with income from self-employment. However, you must tell HMRC and register for self-assessment if you have self-employment income of more than £1,000
The property allowance will no doubt be of benefit to those, perhaps, letting out garages, parking spaces and their homes on short term lets. The trading allowance may be of benefit to those providing casual services such as baby sitting or gardening or earning minimal amounts from auction sites such as eBay.
For more info on this, please contact Moore Chartered Accountants:
[email protected]
By Colin Sharpe