For those of us lucky enough to own furnished holiday homes the taxman has just whipped the flake from our cornet. From 6 April 2012 it will now be much harder to have our lettings treated as a trade.
So what – you might say
Well for a start some very important reliefs will be lost:
- You will no longer be able to claim capital allowances on furniture, white goods etc.
- Some important capital gains tax reliefs on the disposal of the property will not be available.
- Business property relief for Inheritance tax.
(A recent court ruling has clarified when business property relief is available for furnished holiday properties)
What do I do to ensure my property still qualifies as a furnished holiday let?
For a property to qualify it must be:
- In the UK or EEA
- Available for commercial letting to the public as holiday accommodation for at least 210 days a year
- Actually let as such for at least 105 days a year
- A short term let of no more than 31 days (You can let the property out for periods longer than 31 days in one stretch but none of the days will count towards your qualification. However, if the total of all or any ‘longer term occupation’ lettings is more than 155 days in the period/tax year, your property will no longer qualify as a FHL for that)
Declaring rental income and expenses
This is done via the land and property pages attached to a self-assessment Tax Return.
If you want any further information on this blog please contact the office on 01633 871122 and ask for Barbara Power.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
Image courtesy of Simon Howden at FreeDigitalPhotos.net