This new measure introduces two annual tax allowances for individuals, each worth £1,000. One allowance is for trading income, and the other is for property income. These allowances mean that if your income from trading or property falls under £1,000, you won't need to report or pay tax on it. If your income exceeds £1,000, you have the option to deduct the allowance from your income rather than deducting actual expenses when calculating your taxable profits.
This measure simplifies tax obligations for people earning small amounts from selling goods or services, renting property, or other similar activities. It aligns with the government's goal of simplifying the tax system and supporting the digital and sharing economy.
The trading allowance also applies to certain miscellaneous income from providing assets or services. However, it doesn't apply to partnership income or income covered under Rent-a-Room Relief legislation.
These allowances allows individuals to choose the most beneficial method for calculating their taxable profits.
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