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
 
Vanessa Pearson
18th June 2018 Public Sector contractor wins IR35 case

HMRC have lost a second IR35 case this year, and their second case against the same contractor, putting into doubt their own understanding of the IR35 rules. Ian Wells, director of personal service company Jensal Software Limited provided his services to the Department of Work and Pensions via a recruitment agency during 2012 and 2013.…

Read More »

Jeannette Hume
18th June 2018 EIS Money: Beware how you spend it!

Tech companies that are financed through EIS equity cash will be aware that this ‘tax wrapper’ can be super-generous, but that many criteria have to be met to ensure eligibility. One of these long standing criteria has been that the company must use the proceeds (up to £5m pa) raised: In either a qualifying trade…

Read More »

Thomas Carter
15th June 2018 Making Tax Digital, VAT and newly registered businesses

All VAT registered businesses with a turnover over the current VAT registration threshold of £85,000 will be required to comply with the Making Tax Digital (MTD) record keeping and reporting requirements for VAT periods which start on and after 1st April 2019. Where a business is VAT registered but has turnover under £85,000 at April…

Read More »

Jodie Tarbin
11th June 2018 Changes ahead for CGT payment

HM Revenue & Customs is proposing, in less than two years’ time, to rewrite the rules around Capital Gains Tax, CGT, following the disposal of a residential property. The current timescale for payment is going to be slashed to 30-days. From April 6 2020, a payment-on-account of CGT, will be required following the sale of…

Read More »

Richard Alecock
4th June 2018 Property Allowance

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…

Read More »

Victor Courdelle
4th June 2018 Whiting & Partners Now Xero Platinum Champion Partner

We are very proud to announce that on 23 May 2018 we achieved Xero Platinum Champion Partner status, joining a select group of 80 other firms Nationwide.  The hard work of all Partners and Staff in reaching this milestone is a credit to each individual and the Firm as a whole. Many of our clients…

Read More »