A new £1,000 allowance for property and trading income came into effect during 2017/18. The allowances are of most benefit to micro-entrepreneurs, such as those with secondary incomes who, for example, let property through sites such as Airbnb and trading via e-marketplaces.

The allowance can be claimed against property/trading income OR the taxpayer may deduct expenses incurred ‘wholly and exclusively’ for the purposes of the trading/property businesses. Care is needed as the deduction of the allowance cannot create a loss. Restrictions also apply to ensure no-one benefits from both rent-a-room relief and this new allowance.

Finally, as these allowances act independently of each other, it is possible to receive £1,000 of trading income and £1,000 of gross property receipts to create a situation where the entire £2,000 would be exempt from Income Tax.

If you are interested in how property and trading allowances can be taken advantage of please do contact us.

This entry was posted on Thursday, 31st May 2018 at 9:04 am and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed.

Tags: allowance, income, letting, property, Tax