Parking for rent?

Newsletter issue - September 2019.

Finding a parking space in a town centre or near to the station is often frustratingly limited. So, if you have a driveway, field or land that can be utilised for parking, you may well have an excellent opportunity to earn some extra tax-free income.

Two new allowances - each set at £1,000 - were introduced from 6 April 2017, one for trading income and one for property income. The allowances are available in addition to the personal allowance.

If you rent out property - including say, as a driveway or land, and your income from it is less than £1,000 or less in the tax year, there will be no tax to pay, and no need to inform HMRC about it - it will be totally exempt for tax purposes.

Example

George lives near to the train station which is popular for the commute into the nearest large town. He has a large drive which has parking for two cars. He provides parking for commuters and charges £20 per week.

During the 2019/20 tax year, George earns £980 from parking. He is a full-time working employee and his personal allowance is fully used up against his salary. He has no other income from property or elsewhere.

As the income from letting out his drive is less than £1,000, the whole amount is tax-free and does not need to be reported to HMRC.

Note: If George had made a loss, it would have been beneficial not to claim the allowance, so the loss could be carried forward for offset against any future property income.

Where property income exceeds £1,000 in the tax year, the taxpayer has two choices:

  • deduct the £1,000 allowance from the receipts and pay tax on the excess; or
  • work out the profit or loss in the normal way.

The most beneficial option will depend on the level of the expenses.

If income is greater than deductible expenses, but the expenses are less than £1,000, it will be beneficial to claim the property allowance and pay tax to the extent that income exceeds £1,000. If expenses are more than £1,000, the best result will be obtained by working out the profit in the usual way, deducting allowable expenses from receipts.

Example

Helen owns a paddock close to a stately home which is open to the public during the Summer months. She provides overflow parking for the stately home as and when it is needed. In 2019/20, she earns £4,800 from parking receipts, and incurs expenses of £860.

If Helen calculates her profit in the usual way, her taxable profit will be £3,940 (£4,800 - £860). However, if she claims the property allowance, her taxable profit will only be £3,800 (£4,800 - £1,000). Claiming the allowance is therefore beneficial.

What our clients say about us...

  • "Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."

    ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT

  • "I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."

    Neil Price - Managing Director at Work Relief Charity Recruitment

  • "Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"

    Lee Westrap MBCS - Director - Bulldog IT Services

Request a Callback
Please complete our form
to request a callback
Get a Fixed Quote

Competitive fixed quotes
for agreed services

Find out how to Make more, Keep more and Work less

Increase your profit and
reduce tax liabilities

Your Business Size?

Expert advice for your
business size

 

Marker

Booth & Co  |   The Hermitage  |   15a Shenfield Road  |   Brentwood  |   Essex  |   CM15 8AG        Telephone: 01277 224666    |   Email: info@boothandco.co.uk