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.
Frequently Asked Questions
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Can I Claim Both Allowances?
Yes, you can claim both in the same tax year if you have qualifying trading income and separate property income. Each allowance is worth up to £1,000 and applies to its own type of income, so you cannot use one to cover the other. For example, you could have £1,000 of tax-free side business income and £1,000 of tax-free property income in the same year. We can check how both allowances apply to your situation.
Do I Need to Tell HMRC If I Earn Under £1,000?
Usually not. If your income is £1,000 or less, the allowance normally covers it in full and you do not need to register or report it. The exception is if you already file a Self Assessment return for other income, in which case it is worth confirming how this income should be treated. Even when you do not need to report it, keeping clear records is a good habit.
Can I Claim Expenses As Well As the Allowance?
No. For the same income, you must choose either the £1,000 allowance or your actual expenses, not both. If your actual expenses are lower than £1,000, the allowance is usually the better option, and if they are higher, claiming expenses may save you more tax. We can work out which route gives you the better result.
What Is the trading allowance?
The trading allowance lets individuals receive up to £1,000 a tax year from casual trading, side businesses or self-employment tax-free. If your income goes above £1,000, you can choose to deduct the £1,000 allowance instead of your actual expenses. It is a simple way to avoid detailed record-keeping when your side income is small. We can help you decide whether it suits your circumstances.
What Is the Property Allowance?
The property allowance gives up to £1,000 a tax year of tax-free property income, such as from letting a driveway or occasional short-term lets. If your property income is above £1,000, you can deduct either the allowance or your actual expenses, whichever is higher. It cannot be used where Rent a Room Relief is claimed on the same income. We can review your property income and confirm which option is best.
Who Cannot Use the Trading and Property Allowances?
The allowances cannot be used against partnership income or income received through a company. If you claim actual expenses on a source of income, you cannot also claim the £1,000 allowance on that same income. Where property is owned jointly, each owner can claim £1,000 on their own share of the income. Checking these rules before you file helps you avoid claiming relief you are not entitled to.
How Do I Claim the Trading or Property Allowance?
If your income is £1,000 or less, you usually do not need to tell HMRC. Above £1,000, you need to register for Self Assessment and choose between the allowance and actual expenses on your return. Whichever option you choose, keep clear records of your income and any costs. We can register you and prepare your return so that you claim the right relief.
What Happens If my Income Goes Over £1,000?
Once your trading or property income goes above £1,000, the allowance no longer makes all of it tax-free. You then need to register for Self Assessment and report the income. At that point you can elect to deduct £1,000 instead of your actual expenses. We can help you decide which approach reduces your tax bill and keep the right records.