11th May, 2022, Kayleigh Wilson
In this article, Kayleigh Wilson FCCA CTA, tax specialist at Stephenson Smart accountants, explains how to make sure your property qualifies as Furnished Holiday Lettings.
The uncertainty of the last two years has impacted hugely on the holiday market. It is not only airlines that have been affected, but holidays closer to home. If you own a property that you rent as a furnished holiday let you need to be aware of the impact that a reduction in rental occupation may have on your tax affairs.
There are special tax rules for rental income from properties that qualify as Furnished Holiday Lettings (FHLs).
If you let properties that qualify as Furnished Holiday Lettings you can claim Capital Gains Tax reliefs and you are also entitled to plant and machinery capital allowances for items such as furniture, equipment and fixtures.
There is also a benefit to those wishing to use the earnings to increase the threshold to pay into a pension, as profits on Furnished Holiday Lettings count as earnings for pension purposes.
To qualify as a furnished holiday let your property must be commercially let as a business. You must make the property available for commercial let for 210 days in the year, and actually let the property as furnished holiday accommodation to the public for at least 105 days in the year.
Days when you let the property to friends or relatives at zero or reduced rates is not a commercial let.
There will be some furnished holiday let owners who will have struggled to meet these criteria this last couple of years. However, you may still be able to qualify for tax reliefs. If you have more than one property you may qualify for the averaging election or if your property reaches the occupancy threshold in some years but not in others, you may qualify for a period of grace election.
There are many tax, and other financial benefits, to owning and letting furnished holiday properties as a commercial business. I am a tax expert at Stephenson Smart and specialise in income tax and capital gains tax for individuals. I’m fully qualified to give tailored advice to help you navigate tax relating to your business and personal finances. Please get in touch if I can help.
Profile: Kayleigh Wilson, Tax Specialist
Image: Cranmer Country Cottages