property income allowance

Cracking Property Income Allowance!

Want to find out what is Property income allowance! Give this blog a two-minute read to know all about it.

Property Income Allowance was introduced on 6 April 2017. It was a positive step taken by the UK government to support landlords and property businesses.

If you’re a landowner earning from a rental property, you can now get a £1,000 tax exemption on your property income annually. In this blog, we will be discussed:

  • What is property income allowance? 
  • Eligibility
  • Does property income allowance full relief or not? 
  • Who can’t avail it? 
  • Submitting a Self Assessment tax return to claim it? 
  • Records to Maintain


Whether it’s Income Tax, NICs, CGT, or VAT, our tax experts and accountants would love to help you! Accotax provides a wide range of accounting and taxation services all around the UK. 


What is Property Income Allowance? 


The basic purpose of this relief is to aid individuals on income tax liability from the income earned through a rental property. Seems interesting! Right? But there are certain conditions and limitations to be followed that we are going to discuss below.




This allowance is provided to those, who are earning from:

  • Property Business both in the UK and abroad
  • Commercial and residential renting

A person who’s operating two property businesses can avail a single allowance of £1,000 on both.


Does Property Income Allowance Full relief or Not?


If your income is below the threshold of the allowance in a year, you can get full income tax relief on the income (not profit). In this case, you don’t need to file tax returns or register to HMRC. But you need to keep a check of your property income as when it’s above  £1,000 you become liable for self-assessment

For the property income above the relief level, you are legally bound to get a partial benefit. You are given two options to choose from:

  • Subtract your business expenses of property in the usual way
  • Deduct property allowance on your property income

Note that if you are going for partial relief, you don’t need to deduct other expenses except the property allowance of £1,000.


Who can’t Avail it?


You can’t avail of this allowance if you are already receiving property income from the below sources:

  • A company that you or your co-partners run or own
  • A Partnership
  • Employer/ Spouse’s an employer/ Civil partner


In addition, you cannot get this it if:

  • You are claiming tax reduction under a mortgage interest rule for a residential property
  • Letting a room from your own home.


Key Takeaway: People who are self-employed can claim a similar type of benefits called “Trading Allowances” of £1,000. You can claim both if you fall under both schemes. 


Submitting a Self Assessment tax return to claim it?


  • No, you don’t need to submit if your rental income is below £1,000 and there’re no other reasons for filing tax returns 
  • No, you don’t need to submit a self-assessment tax return if your rental income is between £1,000 and £2,500 – But you must contact HMRC
  • Yes, if your property income exceeds £2,500


If your answer is yes, self-assessment might be a daunting process for you. Just let us know to do it! We have a team of tax specialists in the UK to sort out your concerns.


Records to Maintain:


While using this allowance, you should keep a record of the following documents:

  • Invoice copies
  • spreadsheet of Income receipts
  • confirming emails of income received
  • statement from the company, showing your received amount of income
  • bank statements
  • bank deposit pay-in records
  • Record book showing your income from each customer


If you don’t keep an accurate and clear record of these documents or don’t retain them, HMRC may charge you a penalty.


Quick Wrap Up:


We hope you have got your answer to what is Property income allowance. These allowances will be beneficial to reduce your tax liability on property income. Therefore, visit the HMRC website to register.

Still, if you find it difficult, Contact us anytime!

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