(Currently dropped due to general election – expected to be revisited)
From 6 April 2017 there will be two separate £1,000 exemptions for individuals with trading and property income (that is not derived from a partnership).
The objective of these changes is to reduce the tax administration burden for individuals with small amounts of income. A welcome and sensible change!
What qualifies for the £1,000 exemption?
If your income (before expenses) from either of those two sources is less than £1,000, you will no longer have to declare or pay tax on this income. Further to this, individuals with income of over £1,000 can elect to deduct this £1,000 allowance instead of their expenses, if this is more beneficial.
This election to use the £1,000 exemption can be decided on a year by year basis and the relief for property and trading income is independent; you can elect to use against property and not trading and, vice versa.
If you do qualify, you will not be required to complete a tax return. However, if HMRC have already issued you with a return to complete, you must notify HMRC that you meet the criteria as they will still expect to receive one from you otherwise.
Would I receive my rent a room exemption too?
The £1,000 exemption for property income cannot apply in addition to the rent a room relief which is already a generous £7,500, as of the start of the 2016/17 tax year.
Please do not hesitate to get in touch with us if you have any queries.