New announcement. Learn more

CHARTERED ACCOUNTANTS (ICAEW)

News and advice to help make your property business a success

LANDLORDS FINANCIAL BLOG

All

Landlords Tax Property Tax Landlords Tax Returns Landlords Accounts Property Tax Return Property Accounts Landlords Financial Landlords Accountant Tax Returns Tax Chartered Accountants Online Accountant Online Bookkeeping Online Tax Returns Your Online Accountant Your Online Bookkeeper VAT Businessadvice Accounting Cashflow Dividends Expenses PAYE Property Property Accountant Smallbusiness Businesstips Capital Gains Tax FHLs Ihtexemptions Income Tax Inheritance Tax NIC SDLT Taxplanning Cgt Furnished Holiday Lettings HMRC Investment Property Tax Landlord Repairs Pension Property bookkeeper Tax Relief Taxreturn VAT invoice Allowable Business Expenses Annual Exempt Amount Bad Debt Tax Relief Business Expenses Business Rate Capital Allowances Capital Gains Capital gains tax property Cashbasis Compliance Deductibleexpenses Disincorporation Employment Allowance Finance Financialmanagement Gifts HMRC complaints Holiday Lets Tax ISA Lettings Making Tax Digital MakingTaxDigital Mileage Allowance Mobilephones National Insurance Overlaprelief Partnership Partnershipbusinesses Ppr Property Company Tax Property Letting Property Tax Deductible Expenses Propertyallowance Reimbursedexpenses Rent a Room Relief Rental Residence Relief Small Business Tax free income TimetoPay 60 day capital gains limit Abolitionclass2 Accrualsbasis Acquisitions Advisoryfuelrates AI AirBnB Alphabet shares Amap Annual Tax on Enveloped Dwellings Appeal Artificial intelligence Assessment Asset disposal Associated Company Associated Company Tax Rules Autumnstatement Bad Debt Baddebts Badgesoftrade BADR Beancounter Benefits in Kind Breakeven Point Budget Business advice Business asset deferment Business coach Business Continuity Business Entertainment Business Rates Business Rates Relief Business tips Businessgrowth Businesstypes Buy or Lease Equipment Buytolet Capital Allowances for Cars Capital Gain Capitalallowances Capitalexpenditure Car Capital Allowances Carry Back Losses Change of Tax Basis ChatGPT Child Benefit CIS Scheme Class 2 NIC Common Tenant Companies Expenditure Companies House Company Account Deadlines Company Account Filing Company Strike Off Company Tax Efficient Property Companyassociation Companyloanstaxfree Compulsory Strike Off Construction Industry Scheme Contacthmrc Contentmarketing Contributions Corporation Tax Losses Corporation Tax New Regime Corporation Tax Rates CorporationTax Costs Cryptocurrency Customerlistimplications Deductible Business Expenses Deductions Demerger Depreciation Development Directors Directors Loans Directorsloans Disallowable Business Expenses Discovery Dividend allowance Dividend Allowance Reduction Dividend Planning Dividendallowance DLA Domestic Items Tax Relief Dormantcompany EIS Employee Discount Employee management Employeecompensationpayments EmployeeOwnershipTrust Endoflifeplanning Enquiry EnterpriseResourcePlanning Entertainment Entrepreneurmindset Equity Expenses Allowed For Tax Extrabenefit Eyetests Flat Rate Scheme Flipping Furnished Holiday Lets Tax Gift Aid Gift Allowance Growthhacks Help to pay tax bills HICBC HMO Licensing Fees Holdoverrelief Holiday Lettings Tax How to apply for a Business Loan How to Extract Profit Humour Hybrid Illegaldividends Income Income and Gains Inflationary Gains Influencers Inheritance Tax Nil Rate Band Interest Rates Interestrelief Interestrestriction Joint Tenant Keypersoninsurance Landlords Self Assessment Late vat registration LBTT Leadgeneration Leadmagnet Leanbusinessmodel Letting Agent Disbursements Letting Agent Recharres Lettings Relief Lifetime Limit Limitedcompany Liquidation Demerger Loaninterest Long Lets Tax Longservice LTT Mainresidencerelief Managed Lets Management accounting Maritalhomedivorce Marriage allowance Marriageallowance Mileage payment Minimumwage Mixedusesdlt Mortgage costs Mortgage Interest Relief New property Newcompanycarfuelrates Newnicrules NIC 2023 to 2024 NIC savings Nicdisregard Nicreduction NMW Nmwerrors Non Allowable Business Expenses Non-taxable Nudgeletter Optiontotaxvat Overpayment Relief Paperform Partnership schemes Parttime Patternofoccupancy PAYE by Direct Debit Payrolling Penaltypoints Pension Payments Tax Relief Pensioncontributions Pensions Performance-reviews Periodofgrace Periodsofabsence Personal Expenses Personal finance Personalallowance Personalguarantees Postcessationrelief Pretradingexpenses Profit Profit-and-loss ProfitAndLoss Property Allowance Property Development Company Property Incorporation Property Investment Company Property investor accounts Property investor tax tips Property Rental Business Property Trading Propertycompany R40 Recharges by Estate Agents Regularpayments Relief Rent your drive Rentaroom Research & Devolopment Residential property gains Residentialsdlt Retail stock control Retainedprofits Revenue Room for rent tax Rti SA Salary Savings SDLT changes Section 455 Tax Section455tax Selective Licences Landlords Self Assessment Self-employednic Selfemployed Selling Online Seperation Servicecharges Settlementslegislation Simplified Expenses Smallbiz Smallbusinessraterelief Software Sole Trader Spring Budget Staffparties Stamp duty Student Loan Deductions SuccessJourney Tax Allowance on Driveways Tax Allowances Tax Break Tax Codes Tax Deadlines Tax Deductions Tax Filing Deadlines Tax Free Childcare Tax on Company Vans Tax position Tax Refund Tax tips for landlords Taxbillpayments Taxconsequences Taxincentives Taxposition Taxpositionassets Taxrelief Taxreliefs Taxses Terminationpayments Tips Trade professional Training Transfer Assets Transfer Assets Between Spouses Umbrellacompany Undisclosedincome Unpaid Rent VAT Bad Debt Relief VAT Deadlines VAT Disbursements VAT Penalties VAT registration VAT Reverse Charge Vatpenalties Vatregistered Vatregistrationthreshold Wellbeing Working from home

TAGS

Tax implications of letting out your drive

July 4, 2024

If you have room on your drive, you may be able to earn additional income by letting out one or more parking spaces. This can be done through the various apps that exist for this purpose. You can make your drive available on an ad hoc basis, for example to provide parking near an event or for day trippers to the seaside, or regularly, for example, to commuters if you live near a station.

The tax implications will depend on the rental income that you generate.

Rental income of less than £1,000

Where the rental income received in the tax year is less than £1,000, the income is not charged to tax (unless you elect otherwise). The income does not need to be reported to HMRC and can simply be ignored for tax purposes.

Example

Mable lives near a popular sporting venue and lets out a parking space on her drive. She earns rental income for the tax year of £720. As this is less than the property allowance, it is not charged to income tax and she does not need to report it to HMRC.

Rental income of more than £1,000

Where rental income exceeds £1,000, you can choose how you want to be taxed. You can deduct either your actual expenses or the £1,000 allowance from your rental income to arrive at your taxable profit. Claiming the allowance will be beneficial if your actual expenses are less than £1,000.

If you decide to deduct the allowance, you must elect for this treatment to apply; otherwise, you should deduct actual expenses when calculating your profit. You can choose which gives the best result.

Example

David lives near the station and lets his drive to a commuter. He receives rental income from the letting of £2,000 a year. He incurs admin expenses of £120.

Calculating his profit in the usual way by deducting expenses would result in a taxable profit of £1,880. However, if he elects instead to deduct the property allowance, his taxable profit is reduced to £1,000. In this case, an election is worthwhile.

Losses

If actual expenses exceed the rental receipts, it is better not to claim the allowance and preserve the loss, which you can carry forward to set against future profits. This will however mean that you need to report the income to HMRC.

Tax

Landlords Financial

Landlords Tax