Since April 2017, you can earn £1,000 from a trading activity and £1,000 of property related income, without being liable to income tax.
These tax-free allowances on property and trading income are useful as families can generate an extra £2,000 a year of income without increasing their tax bills.
Obviously, these small amounts will not be a replacement for your day-job, but they do contribute to financing your monthly bills.
What property income could this cover?
You could rent out:
- your drive as a parking space if you live in an area where parking spaces are at a premium,
- a part of your garden as a paddock or allotments if you have the space.
One interesting aspect of this relief is that if you own property jointly, both parties are eligible for the £1,000 property allowance to set off against their share of the gross rental income.
What trading income could this cover?
The scope for using the £1,000 trading allowance are perhaps easier to exploit. Any hobby where you have an opportunity to sell goods produced, for example:
- internet sales
- craft products
- hiring power tools
- or any service related activity, mobile hairdressing, gardening support, babysitting.
If you do claim either of the above allowances, you cannot claim any expenses related to the activity.
Also, you cannot claim the allowances if the property or trading income is linked to a company, partnership to which you are connected, or your employer or the employer of your spouse or civil partner.
Even though there may be no tax consequence, you are still required to keep a record of your income covered by these allowances.
And one final note, these miscellaneous income sources may also affect your eligibility for benefits and tax credits.
For more information call us today on 0141 887 7766.