The Property Income Allowance: worth claiming?

If you’re a landlord earning rental income from your property, you can get up to £1,000 rental income tax-free each year: 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

• 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.
• Maybe not, if your rental income is between £1,000 and £2,500 – but you still need to contact HMRC.
• Definitely, if you earn more than £2,500 from rent.

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