Thu 12 / 10 / 17
The Effect of the 2017 Trading and Property Allowances on Brighton Businesses
Ahead of the new Trading and Property Allowances, Plummer Parsons share how small to medium businesses can benefit from up to £2,000 a year tax-free income.
With excellent transport links to the capital, a thriving small business community and high quality of life, it’s no wonder that Brighton has been officially recognised the best place in the UK to start up a business.
As the city with the highest number of startups outside of London and one of the greatest densities of small to medium sized businesses in the country, Brighton will be uniquely affected by the new 2017 Trading and Property Allowances. Released in the 2016 budget, but held off until after the results of the 2017 General Election, the allowances usher in valuable financial breaks for micro-entrepreneurs and small property and trading businesses.
Running a small business comes with unique challenges, primary among them being a lack of adequate human resources to cover vital financial and administrative duties. The 2017 allowances seek to minimize the tax obligations on small incomes and lessen the burden of the previous administrative and reporting requirements, by changing the parameters of what needs to be declared to the HMRC. Making it easier for business owners to focus on doing what they do best.
If you currently earn an income from any trading activity, be it gardening or selling craft items in the boutiques of North Laines; or property, which includes both long term lets to private tenants and short term rentals in central Brighton locations via sites like Airbnb, you are eligible to be in receipt of the allowances.
There is a £1,000 allowance for trading and miscellaneous income and another £1,000 allowance for income from property. Potentially providing you with up to £2,000 a year of tax-free income.
The operation of the allowances is dependent upon whether the income for either the trading or property allowance exceeds the respective £1,000 allowance.
If your trading or property income is less than the relevant allowance, before expenses, you will receive full relief, and will not have to declare tax to the HMRC. For example, if someone’s gross trading and miscellaneous income does not exceed £1,000, it will normally be covered by the allowance.
Full relief is automatically given unless you elect otherwise, on, or before, the anniversary of your usual self-assessment filing date for the tax year for which the election is made.
If your income exceeds the £1,000 limit, you can calculate your taxable profits in one of two ways. You can either elect to deduct the allowance from your gross receipts or you can choose to deduct your actual allowable expenses in the normal way.
These provisions are only current for the tax year of 2017 to 2018 and may be subject to revision or change in subsequent years, so it is important to keep in contact with your Brighton accountant to stay abreast with the regulations of the allowances.
For a more in depth look at the regulations and exclusions of the allowances, read accountancy firm, read East Sussex accountancy firm, Plummer Parson's localised guide to the 2017 Trading and Property Allowances.
Thanks to Nick from Plummer Parsons for writing this blog.
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