What it is
Both the trading allowance and the property allowance provide up to £1,000 a year per tax year. If you have both types of income you get a £1,000 allowance for each. The trading allowance covers self-employment, casual services such as babysitting or gardening, and hiring out personal equipment.
Do you need to report it?
If your income is £1,000 or less, GOV.UK says you typically do not need to report it, unless one of the exclusions below applies. If it is more than £1,000, you must register for Self Assessment and declare the income on your tax return.
The £1,000 is measured on your gross income, before any expenses.
Allowance or expenses: you choose
When you file, you either claim the allowance in place of expenses, or deduct your actual expenses and ignore the allowance. GOV.UK notes that if your expenses are more than your income, it may be better to claim expenses instead. Compare both on your real figures.
When you cannot use it
The allowances are not available for income from:
- A company that you or a connected person own or control
- A partnership that you or a connected person are involved in
- Your employer, or your spouse's or civil partner's employer
The property allowance
The property allowance works the same way for income from land or property, with joint owners each getting £1,000 against their share. It cannot be claimed alongside tax relief for residential mortgage interest, or with expenses deducted from room-letting income where the Rent a Room Scheme applies instead.
Need a hand with your return?
We prepare and file Self Assessment returns for directors, sole traders and landlords, and tell you exactly what is due and when before anything is submitted. Call 0114 327 1480.