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Where Taxpayers and Advisers Meet

Should I claim property allowance or allowable expenses for this year?

jtufty
Posts:34
Joined:Sun Jan 13, 2013 12:51 pm
Re: Should I claim property allowance or allowable expenses for this year?

Postby jtufty » Sat Mar 14, 2020 3:18 pm

Hi @Sashxxx

You can see here: https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income it says "If your expenses are more than your income it may be beneficial to claim expenses instead of the allowances."

Im happy to be proven wrong, but I read it that I can only claim £1k allowance OR expenses. Not both.

jtufty
Posts:34
Joined:Sun Jan 13, 2013 12:51 pm

Re: Should I claim property allowance or allowable expenses for this year?

Postby jtufty » Sat Mar 14, 2020 3:23 pm

This might explain in clearer: https://www.accountancyage.com/2017/12/19/new-property-allowance-useful-not-simple/

Where property income exceeds £1,000, the legislation allows for so called partial relief. Effectively, individuals can choose either to:

- Deduct their actual property business expenses from their income in the usual way; or
- Elect instead for the £1,000 property allowance as a deduction from income.

It should be noted that if you claim partial relief you cannot deduct any other expenses, just the £1,000 allowance.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Should I claim property allowance or allowable expenses for this year?

Postby maths » Sun Mar 15, 2020 3:39 pm

The relevant legislation is contained in ITTOIA 2005 s 783A et al.

It was introduced in Finance (No 2) Act 2017 s 17 and Sch 3.

Unfortunately iy's a bit tricky to read.

No claim for the £1,000 allowance is needed if gross income is no more than £1,000.

If gross income is greater than £1,000 then either the normal rules apply (ie profit equals income less expenses) OR an election may be made under which only income in excess of £1,000 ie taxable (so-called partial relief).

EG
Income 2,500
Expenses 500

Taxable profit 2,000
Under a partial relief claim only excess of income over £1,000 taxed ie £1,500.
Partial relief should be claimed.

Assume a loss brought forward of 600. Under normal ruled taxable income is [2,500 - 500] less 600 = 1,400 which produces a lower taxable profit then if a partial relief is claimed.

Sashxxx
Posts:15
Joined:Thu Mar 12, 2020 4:58 pm

Re: Should I claim property allowance or allowable expenses for this year?

Postby Sashxxx » Mon Mar 16, 2020 4:02 pm

Thanks both... I did re-read (properly this time) and realise it was either or and not both... sadly :(

Just one other question please... so if you opt for the £1000 relief do you still get to claim the 20% relief of mortgage interest or is it literally everything else or JUST the £1000 relief?

And you still can take the mortgage interest relief every year even if you're in a loss making position and still carry the total loss forward, right?

i.e.

2020/2021
Income £5700
Expenses - £6000
20% Mortagage int -400

So I could c/f a loss of £700 to tax year 2021/2022?

Thanks guys, this is so useful thank you :) Sarah

kanrent
Posts:119
Joined:Tue Dec 16, 2014 8:20 am

Re: Should I claim property allowance or allowable expenses for this year?

Postby kanrent » Sun Mar 29, 2020 6:34 am

Sorry to hijack this post :
If you claim property income allowance on your self assessment return by filling in 20.1
Do you still have to fill out 24 to 29 on your self assessment return (SA105)

kanrent
Posts:119
Joined:Tue Dec 16, 2014 8:20 am

Re: Should I claim property allowance or allowable expenses for this year?

Postby kanrent » Sun Mar 29, 2020 6:35 am

Sorry to hijack this post :
If you claim property income allowance on your self assessment return by filling in 20.1
Do you still have to fill out 24 to 29 on your self assessment return (SA105)


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