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New rules on holiday lettings
Weybridge-based accountancy firm Midgley Snelling are advising those people with holiday property that they let, to be aware that after a period of uncertainty caused by the change of Government, revised rules have now been published surrounding the taxation of holiday rental businesses.
Former Chancellor Alistair Darling had opted to axe the tax break after the European Union ruled that any tax concession to holiday rental businesses should apply throughout the European Economic Area (EEA). Not wishing to incur this loss of revenue, Mr Darling made plans to remove the tax break altogether.
However, the new Government took a different view and decided to retain some of the tax advantages, but with stricter rules.
Midgley Snelling partner James Beecher said: “From 1 April 2011 for companies (6 April for individuals), it will no longer be possible to offset any losses made on such a business against other income, while it will also be more difficult for a property to qualify as a Furnished Holiday Let (FHL) to benefit from other tax advantages, including that any profit made on sale of the business would be liable to Capital Gains Tax (CGT) at 10 per cent, rather than 18 or 28 per cent.
“Previously, the rule was that to qualify as an FHL, a property had to be let out for periods of no more than 30 days at a time and for a total of at least 70 days each year at commercial rates, and to be available for letting for at least 140 days. These annual totals have now been raised to 105 days and 210 days respectively.”
Once a property qualifies as an FHL, the owner may elect for it to remain an FHL for up to a further two years if the 105 day letting requirement is not then met, but the owner must explicitly opt to do this, as it is not automatic.
For more information call 01932 853393 or visit www.midsnell.co.uk
Ibex House, Baker Street
Weybridge, Surrey KT13 8AH
Tel: +44 (0)1932 853393
Fax: +44 (0)1932 854323
email@midsnell.co.uk