skip to navigationskip to main content

Phone: 0191 5678129 

Email:

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.

Choosing a Service

Choosing an accountant that matches your needs

Meet our team

Go through our accountancy team, and see what they are

Free Initial Consultation

Understanding your accountancy requirements

Request a Callback

Lets talk at a more convenient time for you

Great reasons and promises we make to you which is why you should call us before deciding on your accountant.

Our Promises

We’re a dedicated team which strives to provide success to our clients in regards to all their accountancy needs.

Meet our team
footer_icons_artwork

Compliance and Advice

We believe you should always be control of your fees with no surprises. You are entitled to a competitive fixed quote for agreed services, which is exactly what we charge, no a penny more.

Fixed Price Accounting

We'll help you obtain clear goals in the long, medium and short term for what you want to achieve and identify the challenges in the plan and put strategies in place to overcome them.

Tailored Advice

Each business is unique and the challenges they face will be particular to your business and sector and as such our business advice is tailored to be a precise fit for you and your organisation.

Newsletter Subscription

Our monthly newsletter is full of news, views and interesting information from Michael Adamson & Co. Find out more by visiting our newsletter signup form.