New £1,000 tax allowance for property and trading income
In 2016 the former Chancellor of the Exchequer, George Osborne announced the introduction of a new annual tax allowance of £1,000 for individuals with property or trading income. If you have both types of income, you’ll get a £1,000 allowance for each.
The new allowances take effect from 6th April 2017 (2017/2018) but following the disruption caused by the June General Election, the rules governing this allowance have only just been included in the second 2017 Finance Bill, currently progressing through Parliament.
What does this new allowance mean?
If your trading income or property income is less than £1,000 a year, then this allowance will cover this income and there will be no tax to pay on this income and no requirement to declare the income to HMRC.
Individuals with higher amounts of income will have the choice, when calculating their taxable profits, of deducting the allowance from their receipts, instead of deducting the actual allowable expenses. Good news for those who traditionally have very few expenses.
If you own a property jointly with others, you are both eligible for the £1,000 allowance against your share of the gross rental income.
All good news for ‘micro entrepreneurs’ earning minimal amounts from auction sites or hobbies and for individuals renting their own homes for short periods of time, or letting out garages and parking spaces.
Written by: Matthew Walters, Tax Assistant