Hong Kong Salaries Tax vs Personal Assessment 2027 Comparison

Hong Kong taxpayers with rental income or mortgage interest on a self-occupied property can elect Personal Assessment (PA) to consolidate all income sources under one progressive computation. Without PA, salary is taxed under Salaries Tax and rental under Property Tax (flat 15%) separately. PA typically saves tax when you have business losses, large mortgage interest exceeding the HKD 100,000 cap, or your effective marginal rate is below 15%.

When Personal Assessment Saves Tax

PA consolidates Salaries Tax, Property Tax (rental), and Profits Tax (sole proprietorship) into one combined computation using the progressive rate scale. It is beneficial when: (1) Your sole proprietor business loss can offset employment income. (2) You hold a mortgaged self-occupied property and the interest exceeds the HKD 100,000 cap available against rental — PA lets you deduct further interest from total income. (3) Your effective marginal rate from PA is below 15%, making the consolidated assessment cheaper than separate Property Tax flat 15% on rental. (4) You have substantial approved charitable donations exceeding what Salaries Tax alone allows.

How to Elect PA and Pitfalls

You elect PA each year by ticking Part 7 of your annual BIR60 individual tax return. The election applies to that year only — you can switch in/out year by year based on the math. Married couples must elect jointly (both spouses must elect or neither). Pitfalls: PA cannot reduce tax below what each separate computation would produce — IRD will charge the higher of (PA result) vs (Salaries + Property + Profits separately). Always run both numbers before electing. If you have only salary income with no rental or business, PA produces an identical result to Salaries Tax — no benefit, but also no harm.

Last updated May 2026. Sources: MPFA, IRD Hong Kong.