Furnished Holiday Lettings – do you need to take action?
The rules dictating the eligibility of furnished holiday lets (FHL) for tax reliefs are changing from April 2011, partly to encompass the requirement to extend relief to FHL in the European Economic Area (EEA). There are several planning strategies for your FHL business that will enable you to take advantage of certain tax reliefs – but you will need to make sure you meet the new criteria.
Below are some of the key changes to be aware of:
• FHL in both the UK and the EEA will be eligible as qualifying FHL within the (revised) special tax rules. This is the current situation but is not within the legislation.
• The minimum period over which a qualifying property must be available for letting to the public in the relevant period is increased from 140 days to 210 days in a year with effect from April 2012.
• The minimum period over which a qualifying property is actually let to the public in the relevant period is increased from 70 days to 105 days in a year with effect from April 2012.
• Losses made in a qualifying UK or EEA FHL business may only be set against income from the same business.
• A ‘period of grace’ will allow businesses that don’t continue to meet the ‘actually let’ requirement for one or two years to elect to continue to qualify throughout that period.
We strongly recommend that you review your position and consider what the tax changes will mean to you in order to help you decide whether any action needs to be taken.
Please contact our tax partner, Chris Bowker, to arrange a meeting on 01392 211233 or by e-mail cbowker@simpkinsedwards.co.uk
Please note: The above resource is provided for general information only. No responsibility can be accepted by Simpkins Edwards for any use made of the information presented, whether acting or refraining from action as a result of the material published. No action should be taken without consulting a professional adviser.
