The property allowance of £1,000 was introduced in the Finance Act (No. 2) 2017. The legislation can found in ITTOIA2005 s783B to S783BQ.
This property allowance is available from 6 April 2017 and applies to both commercial and residential lettings for both UK and Non-UK property. The property allowance provides full relief where an individual’s relevant property income is less than £1000. It is important to note that the gross income is the figure to check and not the profit. Where the property is held in joint names then each individual owner is entitled to the allowance. Where an individual has more than one rental business, say one in the UK and one overseas there is still only one property allowance given.
It should be noted that the property allowance does not apply to rent-a-room receipts.
A person can choose to either calculate their profits in the normal way by deducting the actual property expenses from the income or elect to deduct the £1000 property allowance from the income (this will be more beneficial for those with expenses below £1000). An election has to be made on or before the first anniversary of the 31 January following the tax year for which the election is being made. Individuals can decide each year which method to use. If there are large repair bills in a year it will be better to claim the actual expenses.
When rent is received from an employer, a connected partnership or a close company in which they are either a participator or an associate of a participator.
Legislation:The property allowance of £1000 was introduced in the Finance Act (No. 2) 2017. The legislation can found in ITTOIA2005 s783B to S783BQ.
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