From April 2017 two new annual allowances of £1,000, for trading and property income will be introduced. This means that from 2017/18 individuals with property or trading income below £1,000 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.
The trading allowance will also apply for Class 4 NIC purposes.
The new allowances will not apply to partnership income from carrying on a trade, profession or property business in partnership.
The allowances will not apply in addition to relief given under the Rent-a-Room relief.
The new allowances will provide simplicity and certainty regarding income tax on small amounts of income from providing goods, services, property and other assets. It will also benefit individuals who receive small amounts of income by eliminating the requirement to file tax returns.