Holiday Property Finder - Furnished Holiday Accommodation in the UK.
The Inland Revenue detail the rules and qualifying conditions which determine whether a property is considered as Furnished Holiday Accommodation. Full details can be obtained from the Inland Revenue website. Providing these conditions are met, holiday letting in the UK is considered as a business and therefore attracts some benefits. As a business, the owner must also adhere to other legislation covering a variety of subjects such as Electricity at Work Act, Health and Safety etc.
Inland Revenue - qualifying tests for a period which is usually the tax year with the exception of first and final years.
- The availability condition is that, during the relevant period, the accommodation is available for commercial letting as holiday accommodation to the public generally for at least 140 days.
- The letting condition is that, during the relevant period, the accommodation is commercially let as holiday accommodation to members of the public for at least 70 days.
- The pattern of occupation condition is that, during the relevant period, not more than 155 days fall during periods of longer-term occupation.
Inland Revenue - treatment of income, offset of trading loss apportioned between owners of the property
- The loss can be offset against the general income apportioned by owner
- The losses not claimed against general income must be set first against any other profits of any other rental business in the same tax year; any balance remaining is carried forward against the first available profits.
Benefits of owning furnished holiday accommodation in the UK
- Allowances for furnishings inclusive of VAT, loan interest relief
- An effective CGT rate of 10% for gains less than £1 million or 18% if higher.
- Potentially exempt for the treatment of inheritance tax.
Legislative and advisory requirements - advice and services provided by letting agents
- Gas Landlord Certicate, Furniture complying to Furniture and Furnishings Fire and Saftey Regulations
- Portable appliance testing and reporting. Periodic inspection of electrical systems.
- Health and Safety assessment and reporting. Fire Assessment
As a general guide to illustrate income, the gross rental income is quoted, this is then subject to variable costs such as the letting agents commission, cleaning and laundry as well as fixed costs of Council Tax or Business Rates, Services and maintenance costs. The letting agent should provide advice on the standards of fixtures and fittings as reccommended by Quality in Tourism. In addition advice should be given regarding other legislative requirements.
