What is the property allowance?
The property allowance lets you earn a set amount of income from property each year without paying tax on it. If your property income is within the allowance, you usually do not need to declare it. Above the allowance, you can deduct it from your income instead of claiming actual expenses.
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Check what you're owed →The property allowance mirrors the trading allowance but applies to income from land and property, such as occasional rental of a driveway, storage space or part of your property. Small amounts of this kind of income up to the allowance are tax-free, and if that is your only relevant income you often do not need to report it.
When your property income exceeds the allowance, you can choose to deduct the allowance from your receipts rather than working out and claiming your actual expenses. This is simpler and can be more beneficial if your costs are low. If your real expenses are higher, you would instead account for the income in the normal way and deduct those costs.
The property allowance is separate from the Rent a Room Scheme, which has its own rules for letting a room in your home, so it is important not to confuse the two. The allowance is a fixed annual figure that can change, so check the current amount on GOV.UK and keep track of your property income to know whether you need to declare it.
How to use the property allowance
- Total your property income. Add up the income you receive from land and property over the tax year.
- Check against the allowance. See whether your income is within the allowance, in which case you may not need to declare it.
- Choose allowance or expenses. If you exceed it, decide whether deducting the allowance or claiming actual expenses is better for you.
- Report through Self Assessment. Declare the income on your tax return where the rules require you to.
Frequently asked questions
- What income does the property allowance cover?
- Income from land and property, such as renting out a parking space, storage, or other small property-related receipts.
- Is this the same as the Rent a Room Scheme?
- No. Rent a Room has its own rules for letting a furnished room in your home. The property allowance is a separate relief for property income generally.
- Do I declare income within the allowance?
- Usually not, if your property income is within the allowance and you have no other reason to file a tax return.
- Can I claim the allowance and expenses?
- No. You either deduct the property allowance or claim your actual expenses for that income, not both.
MoneyFinder is an independent sign-posting service that helps you find financial support you may be entitled to. We are not a government body and do not provide financial advice. Figures are taken from the official sources cited above and were correct when last checked — always confirm current details on the linked GOV.UK pages.