A grand idea for would-be business people
Are you a budding entrepreneur who’s selling products over the web from your back bedroom? Or perhaps you’re renting out one of your rooms via Airbnb?
From the start of the 2017/18 tax year, it’s been possible to claim annual tax-free allowances – one related to trading and the other to property. These provide an exemption from income tax and an excellent opportunity to test the water with a business idea without having to worry about tax compliance issues. There’s no need to register with HMRC if you are generating income of a thousand pounds per annum or less.
This applies to both commercial and residential lettings and gives you full relief from tax if your annual income before tax is less than £1,000. If the property is jointly owned, each individual can claim the allowance against their share of the gross rental income. If you’re earning more than £1,000, partial relief is available.
This is designed for people who are trading in small amounts or receiving miscellaneous income from goods, services or assets. You might, for instance, be selling items on a website such as eBay. Again, with some exceptions, you can claim the allowance where total income is less than £1,000 and partial relief is available for sums under this amount.