Two new tax breaks which were supposed to have applied to earnings from 6 April 2017 have been quietly axed by the Government, for the time being at least, MoneySavingExpert.com can reveal.

First announced in the March 2016 Budget, the tax-free allowances, each £1,000 a year, were supposed to apply to "micro-entrepreneurs", including those making extra cash selling on eBay, renting a room out on Airbnb or through odd jobs.

However, it's now emerged that the tax breaks were among a number of measures taken out of the Finance Bill before it was passed earlier this week, with the Government stripping back the bill to get it through ahead of the snap general election on Thursday 8 June. Next year's cut to the tax-free dividend allowance was also shelved.

There has been little publicity around the removal of the tax breaks. Guidance about the two allowances was removed from the Gov.uk website earlier this week following the changes to the Finance Bill.

It's likely that the tax breaks could reappear in legislation after the election, depending on the outcome. But until then those who had been hoping to benefit from the new allowances will need to prepare for larger tax bills. We asked the Treasury whether the allowances did apply between 6 April and 25 April – when the Finance Bill was cut – but it declined to comment.

Martin Lewis
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What were the tax breaks?

Here's how the two allowances worked before they were dropped:

  • One allowance was to apply to those who earn extra income through "occasional jobs", eg, activities like giving lifts in their car, sharing power tools or selling items online.
  • A second allowance would've applied to property-related income, for example through renting out a room, driveway or loft storage.

What about the 'Rent a Room' scheme?

If you currently rent out a bedroom, for the time being you're still able to use the existing Rent a Room scheme, which offers a £7,500 tax-free allowance on money earned from renting out a room. However, the Government did say in the March 2017 Budget that it plans to consult on proposals to "redesign" the scheme, "to ensure it is better targeted to support longer-term lettings".

For tips on how to make extra cash on the side, see our Boost Your Income, eBay Selling, Facebook Selling and Rent Your Parking Space guides.

Government drops £1,000 tax breaks for online sellers and room renters - for now
Government drops £1,000 tax breaks for online sellers and room renters - for now

What does the Government say?

Jane Ellison, financial secretary to the Treasury, said of the cuts to the Finance Bill: "As is usual at this stage before an election, the Finance Bill is proceeding on the basis of consensus. We will not be proceeding with the majority of clauses in the bill, following discussions with the opposition.

"There has been no policy change and the Government will legislate for the provisions at the earliest opportunity in the next Parliament."