Tax Breaks for Holiday Under Review

HM Treasury has launched a consultation to align the UK with European law regarding Furnished Holiday Lettings

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HM Treasury has launched a consultation to align the UK with European law regarding Furnished Holiday Lettings (FHLs) that may leave owners facing higher taxes and may prevent them from offsetting their losses against personal income. In addition, to qualify as a FHL, the property must be available and let for a greater proportion of the year.

Under current rules, homeowners must make their FHLs available to let for at least 140 days a year and the property actually let for 70 days as a minimum. However, the proposals are for the threshold to increase to 210 and 105 days respectively.

The 50% increase in letting periods will inevitably drive some owners to spend more on their property to ensure they maintain or grow their bookings. Alun Oliver, Managing Director of Property Taxation Specialists, E3 Consulting said “The consultation makes it imperative for all FHL owners to carefully consider the use of their properties and when purchasing or refurbishing, they optimise the tax allowances available to them before April 2011. A recent E3 client who acquired a FHL for £465,000 generated a tax rebate of £9,600 with further savings up to £48,000 over time.”

To optimise your property tax savings please contact us.

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