When the new property and trading allowances were announced they were a nod to the changing way people are choosing to make money. Some people called them the ‘eBay’ or ‘Airbnb’ allowances and they were to allow for income of up to £1,000 to be earned from property or trading free of tax. These new allowances were introduced from 6th April 2017.
HMRC have issued guidance on how they will work. If you receive property income or trading income (not just from eBay or Airbnb) after 6th April 2017 you can claim the allowance of up to £1,000. If you have both sources of income you can claim up to £2,000 free of tax. Another bonus is that if you are within these limits you won’t need to register with HMRC and complete tax returns each year. However, you do need to keep records of the income you receive and obviously there may be other reasons why you need to complete a tax return.
If your income is over £1,000 you will need to register with HMRC and file a return to claim the allowance.
There are a couple of things to be aware of.
You can’t claim the allowance for property income received in respect of your own home (the Rent-a-Room Scheme is available for that).
If you do claim the allowance you cannot deduct any business related expenses when calculating your taxable profit. So, if your allowable expenses are higher than £1,000 it won’t be worth claiming the allowance.
As with most things it will be a case of looking at your personal circumstances and doing your sums to work out whether it’s worth claiming the allowances.