Furnished holiday lets
If you’re serious in the property world, you’ll want to know about furnished holiday lets..
Covid-19 inflated the appetite for ‘staycations’ by us Brits who were already battling with just one of the implications of Brexit, long queues at airports. Maybe, that won’t change anytime soon and, if you have doubts, pause reading this and try booking something!
For tax purposes, furnished holiday lets can be treated as investment properties when that suits, or like a trade when trading reliefs are available
Happily, they’re likely made up of residential accommodation but qualify for most of the advantages normally associated with commercial property. It’s a special tax regime normally only available to trading properties
Might be worth considering which properties in your existing portfolio could benefit?
Here are some of benefits of qualifying furnished holiday lets:
- No restriction on tax relief for interest and finance costs
- Capital allowances for fittings, fixtures, furniture
- Rollover relief on replacement business assets
- Business asset disposal relief
- Holdover relief for gifts
- Normally no National Insurance
- Profits qualify as earnings from a pension contribution perspective
If you are seriously and actively involved in your business, then it may be exempt from Inheritance Tax!
Where you own furnished holiday lets, but are not actively involved in the business, it might be worth considering an HMRC tax pre-approved, Exempt Unit Trust, which is not subject to Inheritance Tax or Capital Gains Tax. Oh, and rental income rolls-up gross
As you’ve stuck with reading this far, let’s devote the last paragraphs to ‘tax-free holiday homes’
If your furnished holiday let has never been used for any other purpose, then the entire gain arising on the gift of the property, can be held-over by a joint election of the transferor and the transferee
If the transferee then uses the property as their main residence, any capital gain arising on sale, including the original held-over gain, could be fully exempt
If you already knew all that, then have two house-points!
If you didn’t, it’s likely because your current advisor didn’t know either, so let’s talk
Testimonials
- “Having been a client for around 20 years, they have assisted us many times, always putting our interests first. They have always acted with honesty and integrity. With a wide network of professionals an answer is always found to whatever problem has been presented to them.”
- Richard Mancey
- Managing Director, Paultons Park Ltd
- “Acted for me since 1998. Great ability to look at the bigger picture and always with my interests uppermost. Well connected and typically brings other professionals in to the advice process”
- Patrick Trant
- Chairman, Trant Engineering Ltd
- “I have been a client for more than 10 years throughout which time I have found them to be professional and competent, operating as part of a team with a wide knowledge of tax and related planning. They put my interests first and are particularly good at explaining technical subject matter in a straightforward way”
- Anthony Mowatt
- Chairman, Keystone Legal Ltd a Sunday Times Top 100 Track company
- “In almost twenty years of working for us they have acted with honesty and integrity as one of our trusted advisers. We are always treated as important and nothing is too much trouble”
- John Reilly
- Managing Director, John Reilly (Civil Engineering) Ltd
- “Worked for me for more than 15 years on a variety of projects, large and small. They are particularly adept at using applied knowledge and expertise to work with their network of professionals to deliver my goals. I have found them very easy to work with and happily recommend them to others”
- John Clark
- Managing Director, T Clark & Son Ltd
- “Having been a client for around 20 years, they have assisted us many times, always putting our interests first. They have always acted with honesty and integrity. With a wide network of professionals an answer is always found to whatever problem has been presented to them.”
- Richard Mancey
- Managing Director, Paultons Park Ltd
- “Acted for me since 1998. Great ability to look at the bigger picture and always with my interests uppermost. Well connected and typically brings other professionals in to the advice process”
- Patrick Trant
- Chairman, Trant Engineering Ltd
- “I have been a client for more than 10 years throughout which time I have found them to be professional and competent, operating as part of a team with a wide knowledge of tax and related planning. They put my interests first and are particularly good at explaining technical subject matter in a straightforward way”
- Anthony Mowatt
- Chairman, Keystone Legal Ltd a Sunday Times Top 100 Track company
- “In almost twenty years of working for us they have acted with honesty and integrity as one of our trusted advisers. We are always treated as important and nothing is too much trouble”
- John Reilly
- Managing Director, John Reilly (Civil Engineering) Ltd
- “Worked for me for more than 15 years on a variety of projects, large and small. They are particularly adept at using applied knowledge and expertise to work with their network of professionals to deliver my goals. I have found them very easy to work with and happily recommend them to others”
- John Clark
- Managing Director, T Clark & Son Ltd
