The March 2016 Budget announced that from April 2017 two new allowances of £1,000 each would be introduced for property and trading income.
Individuals with property income or trading income below the level of the allowance will no longer need to declare or pay tax on that income.
Those with relevant incomes above £1,000 can either simply deduct the £1,000 allowance from their property and/or trading income or they can deduct their actual expenditure in the normal way.
This measure is aimed at taking out of the taxation system those individuals who sell items occasionally whether by new media such as eBay or via more traditional means such as car boot sales.
Individuals who may rent out their house for a few weeks a year, or rent out their drives as parking spaces, may also benefit from these new allowances.
Examples
- Bob has rental income, from letting people park their cars on his drive, of £5,200 for the year ending 5 April 2018 and the actual expenses relating to this are £320 for the year. Bob would declare income from land and property of £5,200 less the allowance of £1,000 to give a net taxable income of £4,200.
- Tom sells tomato plants from car boot sales and via the internet. His sales for the year ended 5 April 2018 are £890. He would not need to disclose this on his tax return or via any other means to HMRC.
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Article from ACCA In Practice