Tax £1,000 allowance for trading and property income
I frequently get asked "Do I need to put XXX on my tax return?" This new measure effective from 6th April 17 will mean I can start to answer "No" to some of these questions.
If you have a small source of income either because you are trading or because you have some property income, you may be able to avoid the hassle of putting it onto your tax return, and perhaps remove yourself from self assessment altogether.
The allowances are £1,000 - one for trading income and a separate one for property income.
If your total income (before deducting expenses) in each of these categories is less than £1,000 you do not have to declare or pay tax on it.
If your income exceeds the £1,000 you have a choice of deducting the £1,000 from your income or deducting the actual expenses, when calculating the profit for tax. This applies to class 4 NI contributions too. Although if you deduct the £1,000 you cannot use it to create a tax loss.
The allowance will not apply to partnership income, and do not increase or enhance the relief given under the rent-a-room scheme.
If you own a property jointly with another person you are each eligible for the £1,000 allowance.
You can still voluntarily register to pay class 2 NI to ensure your pension is covered.