Do I need to declare rental income if it is under £1,000?

Full answer

The property income allowance permits up to £1,000 of gross rental income (before expenses) each tax year to be received completely free of Income Tax, and if this is your only property income and you have no other requirement to complete a Self Assessment return, you generally do not need to declare it to HMRC at all. This is particularly useful for people who rent out a driveway, spare room (though the separate Rent a Room Scheme, with its much higher £7,500 threshold, is usually more beneficial for lodgers), storage space, or let a property for only a few weeks a year. If your gross rental income is between £1,000 and £2,500, you do not automatically need to register for Self Assessment, but you should contact HMRC, who may ask you to report the income informally or through a simple form rather than a full tax return. If gross rental income exceeds £2,500 a year, you must register for and complete Self Assessment, reporting the full income and being able to deduct either actual allowable expenses or the £1,000 property income allowance (whichever is more beneficial), though you cannot claim both the allowance and actual expenses for the same income in the same year -- you must choose one method for that source of income. Even where the £1,000 allowance means no tax is due, if you already file Self Assessment for other reasons (such as self-employment or higher income), you should still include the rental income and claim the allowance on your return, rather than omitting it entirely.

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