This is a freeview guide. Subscribers see here for the full guide.

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

The allowances are separate: one 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. You then may elect to deduct the £1,000 allowance if that is more beneficial than claiming tax relief for your actual allowable expenditure.
  • There is a separate election for each allowance by tax year.
  • Relief is excluded for certain types of income, business and in certain circumstances.

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.
  • If you already have other taxable income from self-employment you cannot claim the trading allowance.
  • See Allowances: Trading and Property for how the allowance applies to partnerships.
  • See Coronavirus: taxation of support grants, for restrictions when claiming the Self Employed Income Support Scheme.

Property allowance

  • If you have both UK and overseas property income, see Allowances: Trading and Property for 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.
  • Directors and employees who receive rent or an allowance for Working from home cannot claim the property allowance. 
  • Check the rules in Allowances: Trading and Property if you are claiming a deduction for mortgage interest on residential property.

Useful guides on this topic

Allowances: Trading and Property
What are the trading and property allowances? Who can claim them? What are the restrictions?

Adviser guide: Property profits and losses
What is property income?  How is it taxed?  How are profits calculated? How are losses relieved?

Property profits & losses: Toolkit (2020-21)
Our Property profits & losses toolkit takes HMRC's version and adds a great deal more information about what you can claim as an individual. There are separate rules for companies carrying on property businesses.

Flat (fixed) rate expenses or actual cost toolkit
What types of expenses can I use fixed-rate expense deductions for? Which is better, fixed-rate deductions or the actual cost? 

Squirrel ad

Are you enjoying our content? 

Thousands of accountants and advisers and their clients use as their primary TAX resource.

Register with us now to receive our unique FREE Tax Planning Tips and Advice Guide & our FREE OMB Newsletter.




Enjoying the Practical Tax content on 

Sign up now to receive a unique FREE Tax Planning Tips and Advice Guide & our FREE Newsletter.

.Squirrel ad