Patricia Mock, tax director at Deloitte, in commenting on the Budget, focused on the £1,000 tax-free allowance granted for small traders and landlords.
Mock said: “A welcome simplification has been announced for those who make small amounts of income, either by trading or property rental. It seems there will be a separate allowance for each source of income, and if either is less than £1,000 it will not be taxable and will not need to be declared on a tax return.
“This is a helpful exemption and it appears that it is a genuine exemption, rather than a zero tax rate. It relates to bands of tax as is the case for the personal savings allowance and the dividend tax allowance.
“Those with income in these categories of over £1,000 may find the relief less of a simplification as they will be able either to deduct the allowance from their cash income or calculate their profit by deducting expenses. They will need to decide the best way to proceed. It is not clear how this new relief will interact with rent-a-room relief which applies to those who let a room in the house they are living in. This relief is currently £4,250 but is due to rise to £7,500 from April 6, 2016.”
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