{"id":3916,"date":"2022-08-02T11:16:11","date_gmt":"2022-08-02T10:16:11","guid":{"rendered":"https:\/\/cloud9accountingteam.co.uk\/?p=3916"},"modified":"2022-08-02T11:16:11","modified_gmt":"2022-08-02T10:16:11","slug":"use-the-property-allowance-to-make-tax-free-income-from-renting-your-drive","status":"publish","type":"post","link":"https:\/\/cloud9accountingteam.co.uk\/sk\/use-the-property-allowance-to-make-tax-free-income-from-renting-your-drive\/","title":{"rendered":"Use The Property Allowance To Make Tax-Free Income From Renting Your Drive"},"content":{"rendered":"<p>The summer is a popular time for events and event parking is often limited. If you have a drive or field that you do not use, you could consider renting it out to make some money. This need not give rise to a tax headache.<\/p>\n<p>However, it should be remembered that all income from renting UK property owned by the same person or persons forms a single UK property business. Consequently, if a person has other rental properties, rental income from renting a driveway cannot be considered in isolation; instead it forms part the income of the existing property business.<\/p>\n<p><strong>Nature of the property allowance<\/strong><\/p>\n<p>The property allowance is a \u00a31,000 tax free allowance which enables an individual to earn tax-free income from property of up to \u00a31,000 a year.<\/p>\n<p>If property income is less than \u00a31,000, there is no need to tell HMRC about it or to return it on the self-assessment tax return.<\/p>\n<p><strong>Example<\/strong><\/p>\n<p>Peter lives in Wimbledon. He has space on his drive for two cars in addition to his own car. During the Wimbledon fortnight he rents out each space for \u00a330 a day. During Wimbledon 2022 he makes \u00a3720 from renting his drive.<\/p>\n<p>He has no other income from property.<\/p>\n<p>As the income from property is less than \u00a31,000, he is able to enjoy it tax-free and does not need to report it to HMRC.<\/p>\n<p><strong>Income exceeds \u00a31,000<\/strong><\/p>\n<p>An individual can still take advantage of the \u00a31,000 property allowance even if their income from property is more than \u00a31,000 in the tax year. The allowance can be deducted from the income to arrive at the taxable profit. This will be beneficial where the actual expenses are less than \u00a31,000.<\/p>\n<p><strong>Example<\/strong><\/p>\n<p>Petra lives near a popular outdoor concert venue. During July and August she rents a parking space on her drive. In 2022, this generate her income of \u00a31,500. She incurs expenses of \u00a3200 in advertising the space and associated administrative costs.<\/p>\n<p>She has no other property income.<\/p>\n<p>As her income exceeds \u00a31,000, she must tell HMRC about it. However, she can take advantage of the property allowance to reduce the tax that she pays on that income.<\/p>\n<p>If Petra does not claim the property allowance, her taxable profit will be \u00a31,300 (rental income of \u00a31,500 less expenses of \u00a3200). However, by claiming the allowance, she is able to reduce her taxable profit to \u00a3500 (rental income of \u00a31,000 less property allowance of \u00a31,000). Claiming the allowance will save her tax of \u00a3160 if she is a basic rate taxpayer and \u00a3320 if she is a higher rate taxpayer.<\/p>\n<p><strong>Expenses of more than \u00a31,000<\/strong><\/p>\n<p>Claiming the property allowance will not be beneficial if associated expenses are more than \u00a31,000. Where this is the case, it is better to deduct the actual expenses.<\/p>\n<p><strong>Example<\/strong><\/p>\n<p>Paul has a field that he is uses to offer event parking. In July 2022, he makes rental income of \u00a38,000. He also incurs expenses of \u00a31,200 on staff and admin costs.<\/p>\n<p>If he calculates his rental profit in the usual way, his taxable profit is \u00a36,800 (\u00a38,000 &#8211; \u00a31,200). However, if he claims the property allowance, his rental profit increases to \u00a37,000 (\u00a38,000 &#8211; \u00a31,000). Claiming the property allowance is not worthwhile.<\/p>\n<p><strong>Losses<\/strong><\/p>\n<p>It is also better not to claim the allowance where deducting expenses from rental income would give rise to a loss so as to preserve the loss. The deduction of the allowance cannot create a loss. However, this will involve some administration and completion of the return. Consequently, if rental income is less than \u00a31,000 and there is little opportunity to use the loss, claiming the property allowance may be the preferred option.<\/p>\n<p><strong>Partner note: <\/strong>ITTOIA 2005, ss. 783B \u2013 783Q.<\/p>\n<p>&nbsp;<\/p>\n<h5>&gt;<img decoding=\"async\" class=\"emoji\" role=\"img\" draggable=\"false\" src=\"https:\/\/s.w.org\/images\/core\/emoji\/13.0.1\/svg\/2602.svg\" alt=\"\u2602\ufe0f\" \/><strong>For Help<\/strong>\u00a0with Topic above or any Accountancy help \u2013 contact us:\u00a0<a href=\"https:\/\/cloud9accountingteam.co.uk\/sk\/contact\/\" target=\"_blank\" rel=\"noopener\">Cloud 9 Accounting Team\u00a0<\/a><\/h5>\n<h5>&gt;<img decoding=\"async\" class=\"emoji\" role=\"img\" draggable=\"false\" src=\"https:\/\/s.w.org\/images\/core\/emoji\/13.0.1\/svg\/2602.svg\" alt=\"\u2602\ufe0f\" \/><strong>For<\/strong>\u00a0<strong>Answer on your Question \u2013\u00a0<\/strong>submit your question and we respond asap:\u00a0<a href=\"https:\/\/martinasujova-8e23e.gr8.com\/\" target=\"_blank\" rel=\"noopener\">On Off\u00a0 Question<\/a><\/h5>\n<h5>&gt;<img decoding=\"async\" class=\"emoji\" role=\"img\" draggable=\"false\" src=\"https:\/\/s.w.org\/images\/core\/emoji\/13.0.1\/svg\/2602.svg\" alt=\"\u2602\ufe0f\" \/><strong>For Leads, Tax articles Copywriting \u2013<\/strong>\u00a0those who do not need accountant but need some leads, tax articles for their website\/marketing \u2013 join here and get your unique tax content (copy and paste, ask for sample today):\u00a0<a href=\"https:\/\/cloud9clubsub.gr8.com\/\" target=\"_blank\" rel=\"noopener\">Cloud 9 Club\u00a0<\/a><\/h5>\n<h5>&gt;<img decoding=\"async\" class=\"emoji\" role=\"img\" draggable=\"false\" src=\"https:\/\/s.w.org\/images\/core\/emoji\/13.0.1\/svg\/2602.svg\" alt=\"\u2602\ufe0f\" \/><strong>For Self Employed<\/strong>\u00a0who don\u2019t have accountant \u2013 get regular advice:\u00a0<a href=\"https:\/\/cloud9clubsub.gr8.com\/\" target=\"_blank\" rel=\"noopener\">Cloud 9 Club<\/a><\/h5>","protected":false},"excerpt":{"rendered":"<p>The summer is a popular time for events and event parking is often limited. If you have a drive or field that you do not use, you could consider renting it out to make some money. This need not give rise to a tax headache. However, it should be remembered that all income from renting [&hellip;]<\/p>\n","protected":false},"author":7,"featured_media":3917,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_templately_pack_id":"","_templately_imported_at":"","_templately_source":"","_templately_import_session_id":"","site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3916","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Use The Property Allowance To Make Tax-Free Income From Renting Your Drive - Cloud 9 Accounting Team<\/title>\n<meta name=\"description\" content=\"The summer is a popular time for events and event parking is often limited. 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