The property allowance mirrors the trading allowance for landlords: up to £1,000 of gross property income per tax year is tax-free with nothing to report. Above that, you either deduct the £1,000 allowance instead of expenses or claim actual expenses, whichever is lower tax.
It suits small-scale income like occasional driveway parking, storage or infrequent short lets. It cannot be used on top of Rent a Room relief for the same income, and using it means giving up expense deductions including mortgage interest relief. Landlords with real running costs usually do better claiming actual expenses through Self Assessment.
Renting your driveway near the station for £60 a month earns £720 a year, fully covered by the allowance, nothing to report. Earn £1,500 from storage lets with £100 of costs, and the allowance beats actual expenses easily: deduct £1,000 rather than £100, leaving £500 taxable, £100 at basic rate.
