What is the Property Allowance?

The Property Allowance is a £1,000 yearly tax exemption that’s available to landlords who earn taxable rental income from land or property. If you jointly own a property, all part owners can each claim the £1,000 Property Allowance against their rental income share.

If you earn income from self-employment and land or property rental, you can claim the Trading Allowance (another £1,000 tax-free allowance) and the Property Allowance. However, if you claim the Property Allowance you cannot claim for property-related tax expenses (eg mortgage interest, repair and maintenance costs, etc).

If you have two businesses and claim the Property Allowance for one, you cannot claim actual expenses for the other business. And you cannot claim the Property Allowance on income you receive from letting out a room in your own home under the Rent a Room Scheme.

You can choose whether to claim the Property Allowance or not. It may not benefit your circumstances, for example, if a property business is loss making or if allowable expenses relating to renting out your property are more than £1,000, which is often the case.

If you’re expenses are more than £1,000 and you cannot or do not wish to claim the Property Allowance and your gross property income is more than £2,500, you must register for Self Assessment and report your taxable income and expenses via an annual Self Assessment tax return (SA100), plus, supplementary pages UK Property SA105.