The Association of Taxation Technicians (ATT) has given a cautious welcome to the announcement of help for ‘micro-entrepreneurs’ in the Budget.
Chancellor George Osborne announced in today’s Budget two new tax-free allowances of £1,000 each for property and trading income. The aim is to help those involved in the sharing economy, such as people who rent out their home to holidaymakers on Airbnb or who buy and sell on eBay, from April 2017.
Michael Steed, President of the ATT, commented:
“We welcome this attempt at simplification and recognition of the scale of these activities. However, the details of these allowances are not yet clear and we look forward to reviewing the draft legislation to clarify whether the allowances relate only to businesses that trade online or to all micro-entrepreneurs. We would prefer it to be the latter in the interests of fairness.”
The ATT also believes that clarity is required on how the £1,000 allowance available to property income will interact with the existing rent-a-room relief. The Government has indicated that the new allowance will operate in a similar way to the rent-a-room exemption where a landlord has expenses to claim, in that a landlord will need to decide which one is the most beneficial to claim – the allowance or the expenses.
Michael Steed added
“It will be difficult for the Government to sell this as a simple move for micro-entrepreneurs unless it gives greater clarity about the link to the rent-a-room scheme. In addition, the Government needs to be clear whether the deduction of the allowance against such property and trading income will have a similar impact on assessable income for the purposes of calculating entitlement to benefits like Universal Credit. If the allowances create a difference between taxable income and income for benefit purposes then this could have a negative impact on the simplicity that they are supposed to provide.”