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Furnished Holiday Lettings

Furnished Holiday Lettings
Save tax by the seaside!
Learn about the tax benefits of investing in furnished holiday let properties. In this blog you will learn about the tax breaks that go with owning furnished holiday lets and the rules that you have to follow in order to qualify for the reliefs.
 
In order for properties to qualify as furnished holiday lets, they must be held in the UK or the EEA. If you own several UK Holiday let properties, then they are all classified as one business.
There are a couple of qualification rules to start with: -
- the properties must be let on a commercial basis.
- the properties must be properly furnished.
 
In order to qualify as a furnished holiday let there are a few occupancy rules that the property needs to comply with: -
 
a) the 155-day rule - the idea is that these properties are let on a short-term basis, so lettings of over 31 days must not add up in total to more than 155 days in the tax year.
 
b) the 210-day rule - the property must be available for let for 210 days in the tax year.
 
c) the 105-day rule - the property must actually be let for 105 days in the tax year (you may be able to take advantage of averaging rules if you own several furnished holiday let properties).
 
What are the tax breaks available?
 
1. You can claim capital allowances on items bought for the property such as cookers, fridges, carpets, beds etc. You potentially can claim 100% annual investment allowance in year of purchase.
 
2. Any gain made on the sale of the property can be rolled over (the amount of the gain that can be rolled over is restricted if the property did not qualify as a furnished holiday let over the whole period of ownership).
 
3. Gift holdover relief is available.
 
4. Profits from furnished holiday lets count as earnings for pension purposes.
 
5. Gains from disposals of furnished holiday lettings may qualify for entrepreneur's relief (tax rate of 10%).
 
6. Losses from UK properties can be offset against total income earned in the year.
 
7. Loan interest incurred on finance to buy the furnished holiday letting is relieved at the taxpayer’s marginal rate of tax.
 
As can be seen, furnished holiday let’s bring with them significant tax breaks however there are other matters to take account of before jumping into this market, such as possible VAT registration, business rates charges. organising cleaning and maintenance for the property, stamp duty etc.
 
If this blog has sparked an interest and if you would like to explore the possibilities further, please get in touch and we ask you to share this blog with your friends and family.
Furnished Holiday Lets (FHL) HMRC Enquiry Risks
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