Property Income Allowance Calculator
Understanding the Three Options
Option 1 — Full allowance: If gross income is £1,000 or less, no tax is due and no declaration needed. Above £1,000 this option is not available.
Option 2 — Partial allowance: Deduct £1,000 from gross income. Pay tax on the remainder. Best when expenses are less than £1,000.
Option 3 — Actual expenses: Deduct real allowable expenses from gross income. Pay tax on profit. Best when expenses exceed £1,000.
Note: You cannot use the property income allowance (£1,000) and the Rent a Room scheme (£7,500) on the same income source.
Frequently Asked Questions
What is the property income allowance UK 2026?
The property income allowance is £1,000 per year. If your gross rental income from property (not your main home) is £1,000 or less, you are fully exempt — no tax is due and no self-assessment return is required. If income is above £1,000, you can choose partial relief (deduct £1,000) or the actual expenses method.
Can I use £1,000 property allowance and Rent a Room?
No. You cannot use both the £1,000 property income allowance and the Rent a Room scheme (£7,500 threshold) on the same income. The Rent a Room scheme applies to rooms let in your main home; the £1,000 property allowance applies to other property income such as renting a garage or a property that is not your main home.
Does property allowance apply to Airbnb income?
Yes, the £1,000 property income allowance can apply to Airbnb income if the property is not your main home. If the property is your main home and you let it while you live there, the Rent a Room scheme (£7,500 threshold) applies instead. Income above £1,000 from non-main-home property must be declared on self-assessment.
Do I need to complete self assessment for property income?
You must complete a self-assessment return if your gross property income exceeds £1,000 per year. If income is £1,000 or less, you are automatically exempt. If income is between £1,000 and £2,500, HMRC may adjust your tax code instead of requiring a return — contact HMRC to confirm. Above £2,500 you must file a self-assessment return.
What counts as allowable property expenses?
Allowable property expenses include: letting agent fees, legal fees for short lets or lease renewals, buildings and contents insurance, maintenance and repairs (not improvements), service charges and ground rent, utility bills paid by the landlord, council tax paid by the landlord, and a proportion of mortgage interest (restricted to 20% basic rate credit under Section 24 for residential). Capital expenditure and improvements are not allowable as expenses.