£1,000 Trading Allowance – Small Self Employments

This Content Was Last Updated on March 9, 2024 by Jessica Garbett


Property and Trading Income Allowance

The Property and Trading Income Allowance” was introduced in April 2017 – in HMRCs own words:

“The government announced at Budget 2016 the introduction of a £1,000 allowance for property income and a £1,000 allowance for trading income from the 2017 to 2018 tax year. The new allowances will mean that individuals with property income below £1000 or trading income below £1000 will no longer need to declare or pay tax on that income. Those with income above the allowance will be able to calculate their taxable profit either by deducting their expenses in the normal way or by simply deducting the relevant allowance from their gross income. Legislation will be introduced in Finance Bill 2017.” (source)

We’ve confirmed with HMRC that you have no obligation to register as Self Employed if your business turnover is less than £1,000 a year

  • This probably won’t help many businesses as its only £20 a week
  • But if your business does operate at a very low level it may take you outside of tax.
  • It may also give you a years grace if you start your business part way through a tax year, eg January.

If you are already registered for tax, then you still need to prepare and submit your Self Assessment, however there is a box you can tick to say you are exempt, and that saves you entering figures.

These new rules apply for the 17/18 tax year onwards.

They are applicable to Sole Traders only – not Partnerships or Companies.


£1,000 of Expenses

Of more interest is that if your turnover is more than £1,000 a year, you can deduct the greater of £1,000 or your actual expenses.  So if you don’t have a large amount of expenses, this £1,000 minimum may be of interest.  Sole traders only, not partnerships and companies.

Again, these new rules apply for the 17/18 tax year onwards.


Rental Income

Similar rules apply for Rental Income:

  • No need to declare if rental income is under £1,000 PA
  • If rental income is over £1,000, then £1,000 of expenses can be claimed if the actual expenses lower

If you own a property jointly with someone else, the £1,000 allowance applies to all owners individually.