What is the £1,000 property allowance?
The property allowance is up to £1,000 a year tax-free from income from land or property. If your gross property income is £1,000 or less you get full relief and keep records. Above that, you can deduct up to £1,000 instead of your actual expenses. Joint owners can each claim £1,000 against their share.
Figures checked against gov.uk on . General information, not tax advice.
At a glance
- Allowance
- Up to £1,000 a year, per person
- Gross property income £1,000 or less
- Generally no need to tell HMRC
- Other income over £1,000 up to £2,500
- Contact HMRC
- Other income over £2,500
- Register for Self Assessment
When you cannot use it
gov.uk says the property allowance does not apply to income from a company you or a connected person own or control, a partnership in which you or a connected person is a partner, or your employer or your spouse's or civil partner's employer. It is also unavailable if you claim the finance cost tax reducer, such as mortgage interest relief on a residential property.
Letting a room in your own home under the Rent a Room Scheme is separate, and you cannot use the property allowance for that income.
Allowance or expenses
If your expenses are higher than the income, deducting actual expenses may work better than the allowance. If you have both property and trading income, gov.uk says you get a £1,000 allowance for each.
Keep invoices, bank statements or a rent record even when the income is fully relieved: HMRC can charge a penalty if records are not accurate, complete and readable.