01/03/2024
Tax Free Allowance - Trading and Property Income
In 2017, the government introduced two new annual tax allowances for individuals amounting to £1,000 each: one for trading income (sole traders only), and one for income from land or property.
These allowances are not available if the income is from a partnership or a private limited company.
The allowances were introduced on 6 April 2017 for the 2017/18 tax year and beyond, allowing those with small amounts of income to simplify their personal tax arrangements in certain situations. If you have both types of income, you can claim £1,000 allowance for each.
If your income from trading or from land or property is more than £1,000, the allowances can be used to reduce your taxable income.
For jointly owned property each you are eligible for the £1,000 allowance against your share of the gross rental income.
You cannot however use the £1,000 allowance and, at the same time, claim tax relief for expenses so you need to compare the amount of expenses you incur against the £1,000 allowance to see which is the most efficient.
If you would like further information, please contact us.