Property allowance

Produced by Tolley in association with of Crane Dale Tax, part of AMS Group

Owner-Managed Businesses

Guidance

Tax Returns

Property allowance

Produced by Tolley in association with of Crane Dale Tax, part of AMS Group

Owner-Managed Businesses

Guidance

Tax Returns

This guidance note details property allowance which means that the first £1,000 of gross property income is exempt from income tax under certain conditions.

The £1,000 allowances for property is separate to the trading allowance, for full details of the trading allowance, see the Trading allowance guidance note. The allowances are only available to individuals, and an individual may receive both types of allowances.

The property allowance works in a similar way to rent-a-room relief, in that for the property allowance the first £1,000 of gross property income is exempt from income tax.

If the income exceeds £1,000, the taxpayer has a choice of:

•
deducting the £1,000 property allowance from their gross income and being taxable on the excess, or
•
deducting allowable expenses from gross property income in the normal way

The property allowance is of most benefit to ad hoc landlords, such as those letting property through sites such as Airbnb, although it is worth considering whether rent-a-room relief applies as the relief

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Rob Durrant-Walker

Tax Director at Crane Dale Tax , Corporate Tax, OMB, Personal Tax

Rob is a cross-tax advisor with a particular focus on property tax planning, and business structure planning for OMB’s. He provides tax advice to other accounting firms, balancing commerciality, ethics, and understanding complexity. His 30+ years of experience start at the Inland Revenue in Hull. After completing his ATT and CTA by 1999 with PKF, he subsequently worked at KPMG and UHY prior to managing the business tax team as a director at Garbutt + Elliott. Rob is now Tax Director at the independent tax consultancy, Crane Dale Tax. He is a regular author for Taxation magazine with many articles and Readers Forum contributions since 2005, and he contributes as a virtual member to the CIOT Property Tax technical committee. Rob works remotely from Vancouver in Canada.

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Property allowance