10 04 2017

UK Offering New Trading, Property Income Tax Allowances

New UK property and trading income allowances of GBP1,000 (USD1,246) each, which were announced in Budget 2016, came into effect on April 6.

The changes are intended to simplify the tax affairs of those earning small amounts of income from providing goods, services, and accommodation or other assets temporarily. It was intended to support those making a nominal income from the sharing economy in particular.

But campaigners have warned that the absence of guidance for the public may result in "seriously low take-up."

The Low Incomes Tax Reform Group (LITRG) said that poor knowledge and understanding of the change could see taxpayers miss out on tax-free allowances of up to GBP2,000 in total a year, or a tax saving of up to GBP400 a year for a basic-rate taxpayer if both the trading and property allowances apply.

LITRG recommends that clear guidance is provided covering topics such as: who can use these new allowances; when business records need to be kept; making elections for partial relief; and when HMRC needs to be informed about a new trading business or property income.

"The trading and property allowances are another example of fixed sum tax measures being introduced, with no provision for annual uprating," said Anthony Thomas, LITRG Chairman. "The level of both allowances will need to be reviewed regularly so that they are not eroded by inflation and we would strongly support such a measure."