United Kingdom property and trading allowances
The property and trading allowances are separate annual tax exemptions. Gross income, deductible expenses and exclusions determine how each allowance can be used.
- Trading allowance
- Up to £1,000 per tax year.
- Property allowance
- Up to £1,000 per tax year, separately from trading income.
- Expenses
- Allowance relief replaces expense deductions; it is not added to them.
Two separate allowances
Individuals can have an allowance of up to £1,000 each tax year for trading income and a separate allowance of up to £1,000 for property income. Gross income is income before expenses or allowances are deducted. HMRC, Property and trading allowances (opens in a new tab).
Trading income includes self-employment, casual services and hiring personal equipment. The trading allowance does not apply to partnership trading income. For jointly owned property, each owner can use the property allowance against their own share of gross rental income. HMRC, Property and trading allowances (opens in a new tab).
Allowances and expenses
For gross trading or property income above £1,000, partial relief allows a deduction up to £1,000, limited to the income amount, instead of expenses or other allowances. Claiming an allowance does not permit a separate deduction of those expenses. HMRC, Property and trading allowances (opens in a new tab).
Property allowance relief cannot create a loss. Where there are two property businesses and the allowance is claimed in one, actual expenses cannot be claimed in the other. HMRC, Property and trading allowances (opens in a new tab).
Exclusions and reporting
The allowances cannot be used in a tax year with trade or property income from a company owned or controlled by the individual or a connected person, a partnership involving either, or the employer of the individual or their spouse or civil partner. HMRC, Property and trading allowances (opens in a new tab).
The property allowance cannot be used with the residential-property finance-cost tax reducer or for income within the Rent a Room Scheme. Records of income must be kept when either allowance is used. Income below the allowance does not remove every possible Self Assessment reporting requirement. HMRC, Property and trading allowances (opens in a new tab).
Income for Universal Credit purposes is not affected by these allowances. HMRC, Property and trading allowances (opens in a new tab).
Scope
This is general information adapted from government material under the Open Government Licence v3.0, without endorsement or a recommendation. It does not assess individual entitlement or liability. No matching calculator or worked example is available here.