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
 
Megan Turner
4th June 2020 Charity Commission: Reporting on matters of material significance

The Charity Commission released updated guidelines in April 2020 for auditors and independent examiners. This was based around the statutory duty to report to the charity regulators in the UK on matters of material significance.   The three main changes in this updated guidance are as follows: confirmation that difficulties in carrying out an audit…

Read More »

Steven Denton
1st June 2020 HMRC Furlough Claim Update 29th May 2020

From 1st July, whilst still appreciating the benefits of the Furlough Scheme, employers will be able to benefit from the option of bringing employees back to work on a part time basis. This is one month earlier than had previously been announced.   Whilst working, employers will be required to pay their employees at their…

Read More »

Paul Jefferson
22nd May 2020 Dividend update

It is common practice for director/shareholders to be paid a modest salary through PAYE and pay the balance of their remuneration in dividends.  This of course is perfectly permissible if the company has profits available to distribute to shareholders and there is no breach of directors’ duty.  Unfortunately, the dramatic effect that the Coronavirus is…

Read More »

Lisa Smith
19th May 2020 Covid-19 –Statutory Sick Pay Rebate Scheme

The Government have announced that the Statutory Sick Pay Rebate Scheme, which will enable employers with fewer than 250 employees to claim Coronavirus-related Statutory Sick Pay will launch online on 26 May 2020.   Employers are eligible to use the scheme if:   they’re claiming for an employee who’s eligible for sick pay due to…

Read More »

Nick Edgley
19th May 2020 Company cars and fuel during COVID-19

If you are an employee with a company car, and maybe fuel provided, it is worthwhile considering giving up the car, or fuel, during the current pandemic if you are working from home or furloughed.   A company car benefit in kind (BIK) is a set amount based on the list price and emissions regardless…

Read More »

Ian Piper
18th May 2020 Covid-19: Companies House dissolutions now put on hold

Like many Government departments, Companies House have relaxed various compliance requirements to support businesses to get through this Covid-19 period. In their latest announcement, they are making the following temporary changes to their strike off policies:   Voluntary (Form DS01 submitted) Strike Off Applications – Process halted after notice published in London Gazette. Automatic Dissolutions…

Read More »