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From 6 April 2017 individuals have benefitted from two new annual tax allowances of £1,000, the 'Trading and Property Allowances'.

There is one allowance for trading or miscellaneous income, and one for property income.

Key features

  • If relevant income does not exceed the £1,000 allowance there is no need to register for Self-Assessment and declare or pay tax on that income.
  • If relevant income exceeds the allowance, you must register for Self-Assessment and may elect to deduct the £1,000 allowance instead of claiming tax relief for allowable expenditure.
  • There is a separate election each allowance by tax year.
  • The allowance is not available to partners in partnership.
  • Relief is excluded if relevant income includes a payment received from the individual's employer.

Trading allowance

  • You can claim the allowance for trading or other miscellaneous income and can choose how to allocate the allowance between the different income sources.
  • You cannot use the allowance for trading partnership income or if you have any trade (or property) income from:
    • a company you or someone connected to you owns or controls.
    • your employer or the employer of your spouse or civil partner.
  • If you already have other taxable income from self-employment you cannot claim the trading allowance.

Property allowance

  • If you have both UK and overseas property income you can choose how to allocate the allowance.
  • It does not apply to income on which Rent-a-room relief is given or where you claim expenses from letting a room in your own home or to property income from a partnership.
  • You can claim it for income from a jointly owned property where there is not a partnership.
  • You cannot claim if if you are claiming a deduction for mortgage interest on residential property.
  • Directors and employees who receive rent or an allowance for Working from home cannot claim the property allowance. 
  • Sole traders cannot claim as a deduction against their trading income instead of making a claim for tax relief for Working from home. A working from home claim may continue to be made instead.

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