beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Property Income Manual

Property allowance: contents: examples: computation of partial relief for one relevant property business

Stephanie rents out space in her garden in Dundee to a local nursery group from which she has £900 of relievable receipts in the year. She also lets out storage space in her attic for which she receives £300 of relievable receipts in the year. She has legal expenses of £150 in respect of drawing up a rental agreement between her and the local nursery group.

Stephanie elects to use the property allowance for partial relief. All her relevant property income for the tax year is from the one property business (her UK property business).

Stephanie computes partial relief as follows:

Step 1 – Calculate Total Receipts of the relevant property business:

The total receipts of the relevant property business is £1,200.

Step 2 – Subtract the Deductible Amount from Receipts:

The £1,000 allowance is subtracted from the total receipts for her property business. This leaves £200 (£1,200 - £1,000) of taxable profits for Stephanie’s property business.

The legal fees of £150 are not brought into account because you cannot claim both the property allowance and expenses.