Jump to content
Sign in to follow this  
Melboy

Property income allowance gives £1,000 tax relief.

Recommended Posts

I am putting this information up on the forum as there may well be many new and experienced landlords who are not aware of this new'ish HMRC tax break that came into force a year or so ago.

Now I know most of us regular contributers to this forum have an accountant to deal with their property investments etc. but even I got caught out because my accountant was not aware that one of my properties was held in joint names with my business wife so therefore I could claim for her  £1,000 HMRC tax allowance as well as for me.

So for all you landlords with say just the one property and have an expense/repairs claim that comes in at under £1,000 pa you can claim this £1,000 property tax relief..........and if held in joint names £2,000.  You cannot claim this relief for each and multi owned properties you have......but just the once off.

Here it is in full for you all to have a read.

 

Property owners who receive an income from rent could be missing out on a recently introduced tax-free allowance potentially worth hundreds of pounds provided they have low rental income

Taxpayers can claim the property income allowance, which came into effect in April last year, giving the property owner £1,000 of tax relief on their rental income, provided they have few or no expenses. The allowance is worth up to £1,000 each tax year in tax-free allowances for property or trading income from 6 April 2017.

‘Depending on circumstances, this can be a fairly generous tax break for individuals who rent out their property, including land owners, for example farmers. A basic rate taxpayer can save up to £200, while higher rate taxpayers can save up to £400 by claiming the allowance,’ said Annalise Lovett FCCA, partner at chartered accountants Newby Castleman.

‘Because many landlords and property owners fill out their own tax returns, they may well have overlooked the property income allowance, especially as it only came into effect last year, and the 2017/18 tax return is the first time it can be claimed.’

The new allowance can be particularly beneficial to joint owners of property and land, for example married couples, as both parties are able to claim the allowance, ie, up to £1,000 each.

Where the allowance covers all of an individual’s relevant income (before expenses) then they will no longer have to declare or pay tax on this income.

Those with higher amounts of income will have the choice, when calculating their taxable profits, of deducting the allowance from their receipts, instead of deducting the actual allowable expenses. The trading allowance will also apply for Class 4 national insurance contribution purposes.

The allowance does not apply to partnership income from carrying on a trade, profession or property business in partnership. They cannot be used in conjunction with the relief available under the rent-a-room relief rules.

Lovett said: ‘It’s a relatively straightforward way of claiming back a potentially generous amount from the taxman, and if you’re completing your own tax return it might be easy to miss.’

The relief was introduced as part of Finance Act 2017, and introduced a new Part of Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005), to give relief for two new annual tax allowances for individuals of £1,000 each, a trading allowance and a property allowance.

HMRC guidance, Tax-free allowances on property and trading income (updated guidance issued 6 April 2018)

 

Share this post


Link to post
Share on other sites

Thanks for posting this....I was unaware of the allowance.

I'm assuming the allowance covers ALL expenses.....mortgage interest, insurance, ground rent, service charges, phone, postage, car mileage, office expenses, repairs & maintenance etc.

Most people with one property will have expenses in excess of the allowance so it's gonna be better to claim the actual expenses.

Share this post


Link to post
Share on other sites

Thanks Melboy - I'll pass this on.  When is say joint owners can that include brother and sisters?  Logic says yes but in the whacky world of HMRC I'm not sure.

Share this post


Link to post
Share on other sites

If the joint owners are related e.g. brother & sister.....it should make no difference as each joint owner would complete their own tax calculation.

Share this post


Link to post
Share on other sites

I am looking into this further to gain some more precise detail but I can tell you that my Son's accountant automatically, this financial year, deducted the £1,000 from the total rental income received and it does include everything including rates, ground charges etc. etc.  

I would say it's a scheme for only those who have perhaps the one property with the minimum of expenditure outlay.

 

Share this post


Link to post
Share on other sites
11 hours ago, Beard said:

Does this allowance apply to 1 property if you have say 10 properties 

1 property only. 

Share this post


Link to post
Share on other sites
On 1/28/2020 at 2:14 PM, Melboy said:

I am looking into this further to gain some more precise detail but I can tell you that my Son's accountant automatically, this financial year, deducted the £1,000 from the total rental income received and it does include everything including rates, ground charges etc. etc.  

I would say it's a scheme for only those who have perhaps the one property with the minimum of expenditure outlay.

 

I'm just wondering if you only have 1 property and you claim property income allowance on your tax return do you still have to complete the other boxes on the return stating your property expences 

Share this post


Link to post
Share on other sites
2 hours ago, kanrent said:

I'm just wondering if you only have 1 property and you claim property income allowance on your tax return do you still have to complete the other boxes on the return stating your property expences 

According to my Son's accountant.......no.  Son has the one small flat he rents out and his (experienced) business accountant automatically allows and submits the £1,000 tax allowance as per the guidelines in the government information published.

Share this post


Link to post
Share on other sites

Just been reading hmrc Web site

If you claim the property income allowance you can't claim any expences as we already know, unfortunately  I think these property expenses include the agents management fees 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

×
×
  • Create New...