Property and Trading Income Allowances
From 5 April 2017 property and trading allowances were introduced which have the potential to exempt up to £1,000 property income and £1,000 miscellaneous or trading income per year. Individuals can choose to apply this allowance instead of deducting actual expenses from their property income which, if actual expenses are less than £1,000, will decrease profits and tax liabilities as a result.
If income does not exceed £1,000 the allowance can automatically be claimed, avoiding the need to declare property income of less than £1,000 on a Tax Return.
The miscellaneous income allowance works in a similar way and is particularly beneficial for those carrying out a small trade outside of their employment or during retirement, e.g providing professional services to buying and selling second hand goods. Again, the £1,000 can be claimed instead of, not in addition to, actual expenses and as a result becomes beneficial for those trading with expenses or income below £1,000.
The content of this article is for general information only and does not constitute tax advice. It should not be relied upon and action which could affect your business should not be taken without appropriate professional advice.
Danny Henville ACCA
Danny joined Evolution ABS in June 2011 as a trainee studying towards his AAT qualification. Once he had completed these studies he stayed with the firm to complete his ACCA qualification, passing his final exams and becoming a full member in 2016. Not content at stopping there, Danny is now studying for the Chartered Tax Advisor qualification.
When Danny isn't studying, his spare time is spent mountain biking around hills in the South West.