Property Allowance
UK tax glossary · Last reviewed: April 2026
The property allowance of £1,000 per tax year means individuals with gross rental income up to £1,000 do not need to report it to HMRC or pay tax on it. This covers occasional room rental, small amounts of licence fee income, and similar minor receipts.
If gross rental income exceeds £1,000, you can choose to deduct the £1,000 allowance instead of actual expenses — useful when actual expenses are very low. Above the allowance, normal property income rules apply including the mortgage interest restriction.
The property allowance cannot be used in conjunction with the Rent a Room Scheme. Choose whichever gives a better result: Rent a Room (£7,500/year for owner-occupiers who rent a furnished room) will usually be better for home-based lettings.
Common questions
Can I use both the trading allowance and the property allowance?
Yes — they are separate. You can use £1,000 property allowance on rental income and £1,000 trading allowance on self-employment income in the same tax year.
Does the property allowance apply to income from Airbnb?
Yes, if total gross income from all property (including Airbnb) is under £1,000. Above that, report all income and either deduct the £1,000 allowance or actual expenses.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.