Property allowance election to disapply relief

The property allowance is a fixed tax deduction given automatically against income from property if it does not exceed £1,000 in total in a tax year. There can be circumstances where it is more tax efficient to disapply the allowance. This requires a special election.

Losses

Where the property allowance automatically applies but the total expenses incurred in generating the income exceed the income you can elect for it not to apply. This allows you to claim tax relief for the loss.

Example

In 2023/24 Zarina receives ground rent of £500 for an access agreement that runs through her land. As part of the agreement she must maintain the fences which border the access. She replaces these in 2023/24 at a cost of £1,100. Zarina elects to disapply the property allowance. As a result she records a loss of £600 (£500 - £1,100) which she can use to reduce any future taxable income from property.

Making an election 

The property allowance can be disapplied by making an election through a self-assessment tax return or in writing on a standalone basis. The election 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.