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Where Taxpayers and Advisers Meet

Difference between Holiday lettings and rental property

LondonLandlord123
Posts:2
Joined:Tue Mar 29, 2022 9:17 pm
Difference between Holiday lettings and rental property

Postby LondonLandlord123 » Tue Mar 29, 2022 9:28 pm

Hello, I am a property manager in London and would like to know the difference between a furnished holiday let and a furnished rental property, for VAT purposes.

If I were to rent an unfurnished property from a landlord, fully furnish at my own cost, readying it to a move in standard (even providing bedding, cutlery etc but no food or other additional hotel style services), and then (with the owners consent of course) rent the property onwards for periods greater than 28 days, would the rental income be VATable?

I have not been able to find a clear answer from HMRC online and am trying to ascertain the difference between renting a fully furnished property and holiday accommodation for VAT purposes.

Thanks!

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Difference between Holiday lettings and rental property

Postby robbob » Wed Mar 30, 2022 9:24 am

and would like to know the difference between a furnished holiday let and a furnished rental property, for VAT purposes.

here is the perfect starting place

https://www.gov.uk/guidance/hotels-holiday-accommodation-and-vat-notice-7093

Note there is some scope with regard to off season lettings anyway - so scope for this to be


Residential accommodation that happens to be situated at a holiday resort is not necessarily holiday accommodation. For details of how to treat off-season letting see paragraph 5.6.
5.6 Off-season letting
If you let your holiday accommodation during the off-season, you should treat your supply as exempt from VAT provided it is let as residential accommodation for more than 28 days and holiday trade in the area is clearly seasonal.
You should keep a copy of your tenancy agreement or similar evidence that you have to show that your accommodation was occupied for residential purposes only. In such cases the whole of the let, including the first 28 days should be treated as an exempt supply.
The holiday season normally lasts from Easter to the end of September, although some areas, such as London and Edinburgh, receive substantial numbers of visitors and tourists at all times throughout the year and are therefore not regarded as having a seasonal holiday trade.

Some useful info
https://albertgoodman.co.uk/insights/vat-and-furnished-holiday-lets


Note if there are lines in the sand and its not clear whether you are one side of that line or the other then unfortuantely the vat office are unlikely to offer much of a useful opinion - the danger always is that a slight change in circusmtances needs the whole situation to be rvisteed which could result in different end result.

LondonLandlord123
Posts:2
Joined:Tue Mar 29, 2022 9:17 pm

Re: Difference between Holiday lettings and rental property

Postby LondonLandlord123 » Wed Mar 30, 2022 3:24 pm

Thank you for your reply Rob, much appreciated. I have read through both links you have provided, thank you for sharing these. From my understanding there is no clear definition between the two types of rentals. It comes down to how the VAT office view it on the day, how the property is marketed and who comes to stay.

Based on the above, I ascertain that the following are the criteria to consider, is this correct?:

1. It would be necessary to prove that the tenants were not holiday makers, assuming an AST would satisfy this?
2. Where the property is advertised, for example using marketing platforms that advertise holiday accommodation would qualify for VAT regardless of length of stay, the property would need to be advertised on traditional long term rental platforms such as rightmove or zoopla?
3. No additional hotel style services, such as linen changes or meals should be provided (which would be my intention anyway).

Would you agree with the above?

Thank you once again for your help.


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