I have a client who is a partner in a partnership that receives some rental income. The partnership rental profits are shared between the partners on the partnership statements and reported as partnership property income on their respective individual tax returns.
This client also has a small amount of property income from a property owned personally, which is reported on the property pages of his individual tax return.
My question is: Can he claim the £1,000 property allowance against his personal rental income?
My view is that although you cannot use the property allowance against the partnership property income, there is no restriction on using the property allowance against the personal income. A colleague believes that because he receives rental income (which has had expenses offset within the partnership) that this taints the availability of the property allowance and it can't be used.
My view relies on the S783BA definition of a relevant property business being in relation to an individual (so the partnership property business is totally distinct and not included) and I interpret S783BO to only apply to relevant property income (so not the partnership property share) and as no rent has been paid by the partnership to the individual this is irrelevant.
Any insight please? As usual, the HMRC guidance is lacking in examples of anything other than the obvious scenarios.