Reliable, proactive accountancy services for great small businesses.
July 29th 2019

£1000 tax allowance for traders and landlords - a little boost

The £1000 allowances for property and trading income came into force with effect from 2017/18 onwards. The trading income allowance also covers miscellaneous income from the provision of assets or services.

The allowances work in a similar way to rent-a-room relief, in that the taxpayer has choices based on the level of gross trading or property income in the tax year:

  • Income of £1000 or less – either the income is exempt from income tax or the taxpayer can choose to disapply the allowance and calculate the profit or loss under normal business income principles.
  • Income of more than £1000 – either the profit or loss is calculated under normal business income principles or the taxpayer can elect to deduct the £1000 allowance from his gross income and be taxed on the excess

The allowances are of most benefit to micro-entrepreneurs, such as those with secondary incomes from:

  • Letting property through sites such as Airbnb, although it is worth considering whether rent-a-room relief applies as that relief is more generous
  • Trading via e-marketplaces: however, remember that those selling their old possessions are unlikely to be trading

The allowances are set at £1000 and can only be amended by secondary legislation, meaning it is unlikely the level of the allowances will be up-rated annually. As such, the value of these allowances is likely to be eroded over time by inflation.

SHARE
FREE CONSULTATION FORM

Ready to grow to the next level?

Book your free consultation now:

Preferred Method of Contact