Tourism & Leisure: Our Furnished Holiday Lets Campaign
Partial victory for Furnished Holiday Letting businesses
Following our campaign against the previous Government’s proposed repeal of the special Furnished Holiday Letting (FHL) tax rules, we are very pleased that the June Budget announced the repeal will not go ahead.
HM Treasury have instead issued a document for consultation, proposing to tighten the following conditions for relief, with effect from April 2012:
- Increasing the minimum period over which a qualifying property is available to let to the public from 140 days to 210 days in the year,
- Increasing the minimum period over which a qualifying property is actually let to the public from 70 days to 105 days in the year,
- Restricting the use of loss relief, so that a loss from a FHL business in the UK can only be set against future profits from that business (and not other income), and
- Similarly, a loss from a FHL business in the EEA can only be available to set against future profits from that business (and not against other income).
No changes are proposed to the rules allowing a claim to roll-over a capital gain when replacing furnished holiday accommodation, and Entrepreneurs Relief will be allowable when disposing of the business, restricting the rate of CGT to 10%, where the conditions are met.
A FHL business will continue to be able to claim capital allowances on plant, machinery, fixtures and fittings, including those used in the dwelling. To protect those businesses that subsequently fail to meet the above conditions only temporarily, there will be no immediate recovery of the allowances claimed.
Whilst the South West is best placed for a longer letting period, there may still be businesses that may find they qualify for some years, but temporarily fail for other years. The consultation period runs until 22 October, and we will issue a further release when the results are known
To read the Government's Consultation Document, see http://www.hm-treasury.gov.uk/d/consult_furnished_holiday_lettings_condoc.pdf