How the allowance works
| Your gross property income | What happens |
|---|---|
| £1,000 or less | Fully covered. You may not need to report it, unless you file anyway and want to |
| More than £1,000 | Either deduct £1,000, or deduct your actual expenses |
The allowance is per person, not per property. If you own a property jointly, each owner can use their own allowance against their share.
Allowance or expenses: an example
Sam lets a parking space for £2,400 a year and has £300 of costs. Claiming the allowance gives a taxable profit of £1,400 (£2,400 minus £1,000). Claiming expenses gives £2,100. The allowance wins.
Priya lets a flat for £12,000 a year with £3,500 of allowable costs. Expenses give a profit of £8,500; the allowance gives £11,000. Expenses win.
When you cannot use it
- Alongside Rent a Room relief on the same income.
- If you also claim expenses or finance costs against that property income.
- For income from a company you or a connected person controls, or from a partnership you are in.
If you claim the allowance, you cannot also claim the 20% credit for residential finance costs. With a mortgage, actual expenses plus the finance cost credit are often better.
How to claim it in Self Assessment Software
- Open UK propertyIn your return, open the UK property page.
- Go to For all your UK propertyThis block holds the answers HMRC receives once for all your property.
- Enter the allowanceIn 20.1 Property income allowance, enter up to £1,000, but no more than your income.
- Leave expenses emptyDo not enter property expenses as well. Choose Save answers.
If you enter more than £1,000 you see Property income allowance cannot be more than £1,000.
If you claim the allowance and also enter expenses, HMRC rejects the return (errors 8518 and 8519, about boxes PRO24 and PRO25). See HMRC rejected my return.
Still stuck?
- Check you have not entered expenses in the property boxes as well as the allowance.
- Letting a room in your own home? Compare with Rent a Room relief (£7,500) first.
Still not sorted? Contact us and tell us the page, the tax year and any message you see.
Questions answered
What is the property income allowance?
A tax-free allowance of up to £1,000 a year that you can deduct from property income instead of claiming actual expenses.
Do I need to declare rental income under £1,000?
If your total gross property income is £1,000 or less, the allowance covers it and you usually do not need to report it.
Can I use the property allowance and Rent a Room relief?
Not on the same income. Rent a Room relief covers up to £7,500 for letting furnished rooms in your own home.
Is the allowance per property?
No, it is per person. Each joint owner can use their own allowance against their share.
Can I claim the allowance and mortgage interest relief?
No. If you claim the allowance you cannot also claim expenses or the residential finance costs credit.
Official sources
These guides explain how HMRC's rules apply in Self Assessment Software. Check GOV.UK for your own circumstances.