The UK has seen a boom in the ownership of Furnished Holiday Lets thanks to the increase in staycations.
As the summer holidays draw to a close many of us may be considering purchasing a holiday let to boost our income, but there are some very specific tax reliefs to consider when doing so.
What is a Furnished Holiday Let?
These types of properties are considered separate from other residential and commercial properties by HM Revenue & Customs (HMRC) and are classified as trading businesses.
To qualify for the tax benefits that come with this, your holiday let must be actively promoted and let commercially, be furnished for normal occupation and be operated with the intent of making a profit.
It must also:
- Be available for commercial holiday letting to guests and holidaymakers for at least 210 days (30 weeks) per year; and
- Not be rented out by the same person for more than 31 days: and
- There shouldn’t be more than 155 days (+22 weeks) of this type of ‘long-term’ occupation per year; and
- It must be rented out as holiday accommodation to the public for at least 105 days (15 weeks) of the 210 days you have made it available.
If you or your family use the property this doesn’t count towards this total.
How are Furnished Holiday Lets taxed?
They are taxed in the same way as any other trading business and offer several tax benefits as a result, including being taxed on profits rather than an individual income, when set up as a limited company.
This can allow owners to enjoy a lower rate of Corporation Tax and mean that income is treated as tax-free earnings for pension purposes.
Capital Gains Tax (CGT) reliefs can also be applied when a property is sold or transferred, including:
- Rollover Relief
- Gift Relief
- Business Asset Disposal Relief
Owners of Furnished Holiday Lets can also benefit from some capital allowances, such as the Annual Investment Allowance, on certain assets used and fixtures inherent in the property, such as heating, lighting, ventilation, data and power installations.
This expenditure can be deducted from the profits of the business for Corporation Tax purposes.
Owners can also benefit from profit sharing and no National Insurance contributions on income from their Furnished Holiday Let.
Links: Furnished Holiday Lettings
Our BLOG
HMRC cut advisory company car fuel rates – What does this mean for your business?
TESTIMONIALS
The staff at CST are always very friendly and approachable.… Read more “Mr JD Dolling, SW Heating Equipment Ltd”
We have been with CST for more than seven years… Read more “Doris Francis, Engineering Services (Bridgend) Ltd”
Our business has been handled by CST for many, many… Read more “Mr & Mrs Rise”
I moved my business to Clay Shaw Thomas because I… Read more “Sandra Wilkinson of Sage Marketing”
The audit was well planned and executed efficiently, with minimum… Read more “GE Carpentry”
Privately and within the company Clay Shaw Thomas provides a… Read more “Seashore Enterprises”
I am very happy with the service from CST. An… Read more “Mr Atkinson “
The family connection with CST goes back many years and… Read more “Dr Jones”
CST are very efficient, courteous and proactive when dealing with… Read more “Mr CMG Adams”
I have been a client for over twenty years and… Read more “Mr J T Wall”
Always one step ahead of the game, CST have helped… Read more “Mr RT Evans”
CST Staff always give unbiased advice in a clear and… Read more “Mr L Branfield”
It has been a professional pleasure working with CST, they… Read more “Mr P Jenkins”
SUBSCRIBE to our list
If you would like to see full details of our data practices please visit our Privacy Policy and if you have any questions please email tellmemore@clayshawthomas.com.