Property allowance claim for partial relief

The property allowance is a fixed tax deduction for individuals that is given against income derived from land and buildings (property). It applies automatically if the qualifying income received in a tax year does not exceed £1,000 in total. If an individual’s total income derived from property exceeds £1,000, the allowance can be claimed as a deduction from income in place of expenses. This is known as partial relief.

Example

In 2023/24 Margot lets her garage to her next-door neighbour for £1,200 per year. She has no other income from property. She has no direct costs related to this and the only expense she incurs is a small proportion of her council tax. She claims partial relief. Her taxable property income for 2023/24 is therefore £200 (£1,200 - £1,000).

exclusions

The full or partial allowance cannot be claimed if the income:

• qualifies for rent-a-room relief, even if it has been disclaimed
• is derived from a partnership which the taxpayer or their spouse/civil partner is a member
• is derived from a close company in which the taxpayer or their spouse/civil partner owns a material shareholding (5% or more of ordinary share capital)
• is from furnished holiday lets which are taxed as trading income.

A tax deduction is also not allowed for loan or other interest or finance costs relating to borrowing used to buy or improve residential accommodation.

Making a claim 

Partial relief can be claimed through your self-assessment tax return or in writing as a standalone claim. A claim must be made within four years from the end of the tax year to which it relates. For example, for 2022/23 the claim must reach HMRC no later than 5 April 2027.