The £1,000 allowances for property and trading income were introduced from 2017/18 onwards. The trading income allowance also covers miscellaneous income from the provision of assets or services. This guidance note considers the trading allowance, although commentary is included in relation to the property allowance, if relevant. For full details of the property allowance, see the Property allowance guidance note.

The trading allowance works in a similar way to rent-a-room relief, in that the first £1,000 of gross trading income is exempt from income tax. If the income exceeds £1,000, the taxpayer has a choice of:

1. •

   deducting the £1,000 trading allowance from the gross income and being taxable on the excess, or

2. •

   deducting allowable expenses from gross trading income in the normal way

The trading allowance and property allowance are mutually exclusive. Therefore, it is possible for the individual to have £1,000 of gross trading receipts (which must include miscellaneous receipts)