The UK has seen a boom in the ownership of Furnished Holiday Lets thanks to the increase in staycations.
As the summer holidays draw to a close many of us may be considering purchasing a holiday let to boost our income, but there are some very specific tax reliefs to consider when doing so.
What is a Furnished Holiday Let?
These types of properties are considered separate from other residential and commercial properties by HM Revenue & Customs (HMRC) and are classified as trading businesses.
To qualify for the tax benefits that come with this, your holiday let must be actively promoted and let commercially, be furnished for normal occupation and be operated with the intent of making a profit.
It must also:
If you or your family use the property this doesn’t count towards this total.
How are Furnished Holiday Lets taxed?
They are taxed in the same way as any other trading business and offer several tax benefits as a result, such as profits counting as earnings for pension purposes.
Capital Gains Tax (CGT) reliefs can also be applied when a property is sold or transferred, including:
Owners of Furnished Holiday Lets can also benefit from some capital allowances, such as the Annual Investment Allowance, on certain assets used and fixtures inherent in the property.
Profit sharing and no National Insurance contributions on income from Furnished Holiday Lets are other benefits that they enjoy.
Links: Furnished Holiday Lettings
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