See whether electing Personal Assessment lowers your total tax.
Lower total tax
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Personal Assessment tax
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Separate taxation
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Your breakdown
Updates live as you type| Component | Personal Assessment | Separate taxation |
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What Personal Assessment actually does
Hong Kong taxes different kinds of income under different headings. Employment income falls under salaries tax, business profits under profits tax, and rental income under property tax. Each runs on its own rules and its own rate. Personal Assessment is an election that pools all three into a single pot, applies your personal allowances and deductions once, and then charges the combined figure under the progressive salaries-tax scale. The point is to let people with property or business income use the low entry bands and the basic allowance that the separate property and profits taxes do not give them. The Inland Revenue Department applies it only when it produces a lower bill, so electing it can never make you worse off. That said, it does not always help, and this tool exists to show you which way your own numbers fall.
The mechanics under each route
Under separate taxation, your salary is taxed progressively after allowances, your sole-trader profit is taxed at the unincorporated profits rate the calculator applies, currently 7.5 percent on the first $2 million and 15 percent above, and your net rental is taxed at the flat property rate of 15 percent on 80 percent of the rent. That 80 percent reflects a 20 percent statutory allowance for repairs and outgoings, which is built into the figure here rather than itemised. Under Personal Assessment, that same net rental enters the aggregate at 80 percent of rent, the profit enters in full, and the whole sum is run through the progressive scale with your basic allowance subtracted. Both routes get the one-off Budget reduction the tool models, capped at $3,000. Confirm the rates, the property allowance, and the reduction cap with the IRD, since each can change at a Budget.
When separate taxation actually wins: a worked case
Run the defaults. A salary of $300,000, sole-trader profit of $200,000, rent of $120,000, deductions of $18,000 and allowances of $132,000. Net rental for the pool is $96,000 (80 percent of $120,000), so the aggregate is $596,000 and the net chargeable figure is $446,000. The progressive tax on that, less the $3,000 reduction, is $54,820. Now the separate route: salaries tax on the salary alone is just $6,000, the profit attracts $15,000, and property tax on the rent is $14,400, for a total of $35,400. Here separate taxation is cheaper by $19,420, because aggregating pushes income into the 17 percent band while keeping the property and profits taxes at their own low flat rates was the better deal. The lesson is concrete: Personal Assessment helps lower earners with small business or rental income, not someone whose combined income already climbs into the top band.
A practical filing tip and one trap
Because the IRD only grants Personal Assessment when it lowers your tax, the safe move is to elect it on your return whenever you have property or business income and you are not already a high earner. You lose nothing by electing if it turns out not to help. The common trap is forgetting that the election is annual and that a married couple may need to elect jointly for it to bite, since allowances and the reduction cap can apply at the couple level. An edge case worth flagging: interest on money borrowed to buy a let property becomes deductible under Personal Assessment in a way it is not under property tax, so a heavily mortgaged landlord can swing the comparison. This calculator does not model loan interest, so treat it as a prompt to check your own borrowing costs with the IRD.
Frequently asked
Can a salaried employee with no other income benefit from electing?
Almost never. If your only income is employment, salaries tax already gives you the progressive scale and full allowances, so there is nothing for Personal Assessment to improve. The election only adds value when you have income otherwise taxed at a flat rate, namely property income at 15 percent or business profit, that could instead enter the low progressive bands.
Does electing Personal Assessment expose my salary to a higher rate?
It can, which is why the tool shows both totals. Pooling can lift your combined income into the 17 percent band even though each separate source sat lower. The IRD will not actually charge you the higher figure, but seeing it explains why the election sometimes saves nothing. Always compare the two outcomes before assuming the election helps.