Allowances aimed at 'micro-entrepreneurs'

The government has announced the introduction of a £1,000 trading income allowance and a £1,000 property income allowance. These are aimed at ‘micro-entrepreneurs’, such as those letting out property or trading via ‘sharing economy’ websites.

Where individuals are in receipt of income below the new allowances, the income will not be subject to tax and will no longer need to be reported to HMRC.

Where gross income receipts are in excess of these amounts, the recipient can simply take the £1,000 allowance as a deduction against their gross income to arrive at their taxable income figure, rather than having to calculate and deduct the actual expenses they have incurred to arrive at their taxable profit.

‘Micro-entrepreneurs’ in receipt of small levels of trading or property income.

The proposed changes will take effect from 6 April 2017.

This is a welcome step that will greatly simplify the administrative and reporting requirements for ‘micro-entrepreneurs’ and others with small levels of trading or property income.