| Home > Tax Articles > Property Taxes > Furnished Holiday Lettings |
| Furnished Holiday Lettings |
 |
 |
|
Mark McLaughlin CTA (Fellow) ATT TEP reminds property owners to take advantage of beneficial tax treatment for qualifying furnished holiday lettings while they still can. IntroductionThe Budget in April included some good news and bad news for owners of Furnished Holiday Lettings (FHLs). Property letting is not a trade for tax purposes, but owners of FHLs that meet certain conditions can enjoy a number of potential tax benefits associated with trading activities, including:
The good news is that landlords with FHLs elsewhere in the European Economic Area (EEA) can now benefit from FHL tax treatment in respect of them, if the qualifying conditions for FHL treatment are satisfied. Previously, they were treated in the same way as any other type of overseas property. Going, going…The bad news is that the FHL rules are being repealed from next April, for both UK and EEA properties. In the meantime, there is a window of opportunity to take advantage of the FHL rules. For example, HMRC will accept claims for relief or requests for FHL treatment on EEA properties within the normal time limits for amending a Self Assessment Return. However, certain claims such as Rollover Relief and Holdover Relief are subject to a longer claim period (i.e., currently 5 years from 31 January following the tax year in question for individuals, or within 6 years from the end of the accounting period for companies - although these time limits will effectively change in 2010). In addition, HMRC will accept such claims as CGT Taper Relief, relief for pension contributions and Substantial Shareholdings Exemption within this longer timeframe. Furthermore, HMRC will accept late amendments to Self Assessment Returns for 2007 (individuals) and Corporation Tax returns for accounting periods ending after 31 December 2006, in respect of FHLs elsewhere within the EEA. Grab those reliefs!Usually, capital allowances are not available for expenditure incurred on plant and machinery used in a dwelling house. However, under the FHL rules, capital allowances may be claimed on such expenditure. Claims for plant and machinery expenditure in respect of EEA FHL dwelling houses are also possible for earlier periods, within certain limits. However, claims for the 10% 'Wear and Tear Allowance' will not be available. The proposed repeal of FHL tax treatment means that FHL owners who wish to claim Entrepreneurs’ Relief will need to sell their FHL businesses by 5 April 2010. Further details on FHL claims in respect of EEA properties are available in a technical note available via the HMRC website: Furnished Holiday Lettings in the European Economic Area. The above article is reproduced from Practice Update Newsletter (May/June 2009), produced by Mark McLaughlin Associates Ltd. |
|
About The Author  Mark McLaughlin is TaxationWeb's Co-Founder, Director and Technical Editor. He is a Fellow of the Chartered Institute of Taxation and a member of the Association of Taxation Technicians and the Society of Trust and Estate Practitioners. He lectures on tax subjects, is co-author of Tottel's IHT Annual and Ray & McLaughlin's IHT Planning, and Editor of Tottel's Tax Planning and Annual series. Mark's work has also been published in Taxation, Tax Adviser, Tolley's Practical Tax, Tax Journal and Simon's Weekly Tax Intelligence. Since January 1998, Mark has been a consultant in his own tax practice, Mark McLaughlin Associates, which provides tax consultancy and support services to professional firms. He publishes a regular 'Tax Update' e-Newsletter for clients and other professional firms. To receive future copies, contact Mark via his website. |
|
Article Added Monday, 07 September 2009 | 2496 Hits |
Tax Insider Lite
Each month our tax experts reveal FREE tax strategies to help minimise your taxes. Get Tax Insider Lite:
Tax Books
BOOK OF THE WEEK
Capital Allowances for Fixtures: The New Rules
BOOK OF THE MONTH
A-Z of Plant & Machinery
PROUDLY SUPPORTING
