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.

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:

Disclaimer - All information in this post was correct at time of writing.

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