The Property Income Allowance: worth claiming?

We've updated this guide on 24th July 2019

If you’re a landlord earning rental income from your property, you can get up to £1,000 each tax year as a tax-free allowance: this is called the Property Income Allowance.

Basically:

if you earn less than £1,000 from rental income, you don’t need to do anything: it’s completely tax-free.
if your rental expenses are less than £1,000, you can just claim this allowance instead: it’s better and you don’t need to keep receipts.

What you need to remember: if you claim the Property Income Allowance, you cannot claim any other rental expenses.

What if I own the property jointly with my spouse?

If you own a property jointly with others (spouses, civil partners, etc.), you can each claim this £1,000 allowance – even though you divide the rental income between yourselves.

Is it worth claiming the Property Income Allowance?

if you’re renting out one or more rooms from your own home, see if you qualify for the much better £7,500 Rent-a-Room Scheme
But if you’re renting out a buy-to-let or a second property, usually your expenses are higher than £1,000 a year, so only use this allowance if you can’t find your receipts or if in one year you somehow have just a few expenses.

Self-employed people have a £1,000 similar allowance, called the Trading Allowance. If you have both types of income, you can get a £1,000 allowance for each.

Do I need to submit a Self Assessment tax return to claim it?

no, if your rental income is under £1,000 and you don’t have another reason to file a tax return
no, if your rental income is between £1,000 and £2,500 – but you still need to contact HMRC
yes, if you earn more than £2,500 from rent.

You might also want to check out our guide to paying tax on rental income.

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