How the annual ‘property allowance’ works

Instead of claiming for expenses you have incurred against rental income, you can instead claim the £1,000 property allowance. If you’re renting out property jointly with your spouse, each of you can claim this £1,000 allowance. It comes in useful when your actual expenses are less than £1,000. Instead, claim this allowance.


For example, if you were to rent out a driveway for parking and had annual rental income of £1,500, you could claim the property allowance, despite the fact that you probably incurred very few, if any costs. You’d then only have to pay tax on the remaining £500. If your income from renting the driveway was exactly £1,000 or less, you’d pay no tax at all by offsetting the £1,000 property allowance against it.



This allowance cannot be used against any amounts received from:


  • An employer, or a spouse/civil partner’s employer


  • A partnership in which you (or a connected party) are a partner


  • A ‘close’ company in which you (or an associate) are a participator (so, for example, relief can’t be claimed where a director charges their company rent for use of their home – or driveway!) A ‘close’ company is one controlled by five or fewer shareholders


Take a look at this article to see how much people are earning from renting out their driveway.

So, if you fancy this as a side hustle, let us know (it needs to go on your tax return) and we’ll make use of the property allowance for you!

Picture of David Elliott
David Elliott

Chartered Accountant, BSC, FCA

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