FURNISHED HOLIDAY LETTINGS - CHANGE TO TAX BREAKS

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26 Aug 2010 00:00 by whatman Star rating in Kent. 61 forum posts Send private message

fyi:

Government to scale back tax breaks for furnished holiday lettings

Some 65,000 second home owners could lose out under Government plans to reduce the tax benefits available for furnished holiday lettings (FHLs).
In a new Consultation document the Coalition Government proposes a number of changes that reduce the benefits of the existing FHLs treatment. These include:
  • increasing the minimum period for which the property must be available for commercial letting as furnished holiday accommodation during the tax year from 140 to 210 days;
  • increasing the minimum period for which the property must actually be let as furnished holiday accommodation during the tax year from 70 to 105 days; and
  • restricting the use of losses from a furnished holiday lettings business.
The changes will apply to FHLs in both the UK and the European Economic Area (EEA).
The aim is to bring the rules in line with EU law and put the focus on commercial businesses rather than those run for personal use.
Under the existing rules, FHLs that meet certain qualifying conditions are treated as a trade for certain purposes, which enables them to benefit from more generous loss relief than other types of lettings.
Landlords may also be able to claim capital allowances on furnishings, furniture and fixtures and enjoy capital gains tax reliefs (such as rollover relief and Entrepreneurs’ Relief) that are available to traders.
In the Emergency Budget in June, the Chancellor confirmed that the previous Government’s plans to withdraw the FHL rules from 6 April 2010 would not take effect.
The Consultation will run until 22 October 2010. The Government will then publish its response by the end of the year and the measures, which are expected to take effect from April 2011, will be legislated for in the Finance Act 2011.
 
 
 


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