The trading allowance
Individuals can receive up to £1,000 a tax year from casual trading, side businesses or self-employment tax-free. Above £1,000, you can deduct the £1,000 allowance instead of actual expenses.
The property allowance
Up to £1,000 a tax year of property income is tax-free, such as letting a driveway or occasional short-term lets. Above £1,000, you can deduct the allowance or actual expenses, whichever is higher. It can’t be used where Rent a Room Relief is claimed on the same income.
| Property income | Treatment |
|---|---|
| Up to £1,000 | Assessable property income is nil |
| Over £1,000 | Election to deduct £1,000 rather than actual expenses |
| Trading income | Treatment |
|---|---|
| Up to £1,000 | Assessable profits are nil |
| Over £1,000 | Election to deduct £1,000 rather than actual expenses |
Who can’t use them
- Not against partnership income or income received through a company.
- If you claim actual expenses, you can’t also claim the £1,000 on the same income.
- With joint property income, each owner can claim £1,000 on their share.
How to claim
If your income is £1,000 or less, you usually don’t need to tell HMRC. Above £1,000, register for Self Assessment and choose between the allowance and actual expenses on your return. Keep clear records either way.
FAQs
Frequently asked questions
Can I claim both allowances?
Yes, in the same tax year, if you have qualifying trading income and separate property income.
Do I need to tell HMRC if I earn under £1,000?
Usually not, unless you already file Self Assessment for other income.
Can I claim expenses as well as the allowance?
No. For the same income, choose either the £1,000 allowance or actual expenses.