Furnished Holiday Lettings - A Tax Guide - 4th Edition

Furnished Holiday Lettings - A Tax Guide - 4th EditionThe holiday cottage industry brings with it a unique set of circumstances; as providers of specialist insurance for holiday letting owners such as yourself, we understand how to make sure you have the cover that you need, when you need it.  We also appreciate the value that other specialists can add to your holiday cottage business, holiday letting tax and accountancy is certainly one of these.

Owners need to be aware of the latest holiday letting tax legislation and advice in order to make the most of their investment and attempt to gain greater returns.  But how do you keep up to date with this ever changing complex and evolving area?

New edition of Furnished Holiday Lettings – A Tax Guide

If you’re wanting to better understand your tax position as a holiday homeowner, we’re delighted to announce that we’ve teamed up with Claritax Books and tax accountant John Endacott to provide you with the facility to purchase a copy of the latest edition of Furnished Holiday Lettings – A Tax Guide.

This informative book is a practical guide to the tax rules relating to furnished holiday homes and includes comprehensive information on:

  • The background to the tax rules
  • Property letting or trading?
  • Meeting the qualifying criteria
  • Furnished holiday letting in the EEA
  • Sale of a property
  • Holiday lets and exemption from inheritance tax
  • Succession planning for Furnished Holiday Lettings
  • Rates, VAT and other UK taxes

The 3rd edition was 25 – 30% longer than the previous edition and encompassed the latest thoughts on:

  • business structuring to reflect the growth in corporate ownership of property businesses,
  • the impact of increasing number of overseas owners,
  • consideration of the government’s various measures that have increased property taxes on residential property in recent years

It also includes the latest cases on the tax status of holiday lets for income tax and inheritance tax.

This 4th edition contains even more material, including:

  • Capital gains tax changes including new business asset disposal relief, main residence relief reductions and accelerated payment of tax;
  • Latest tax cases on business property relief – Graham and Vigne;
  • Non-residents – NRCGT, SDLT surcharge for overseas purchasers and Brexit;
  • Capital allowances changes – structures and buildings allowances and writing-down allowance reductions;
  • Update on trading status position following anti-avoidance cases and Covid-19 government intervention measures; and
  • VAT developments and small business rates relief changes as well as Covid-19 measures.

Although tax can often be complicated and confusing, you’ll find a number of specifically tailored examples which explain the taxation implications of owning and running a furnished holiday letting property, and the decisions you take each year. Whilst the book isn’t a substitution for taking professional advice from your accountant, it will arm you with knowledge to help you better understand the complexities of holiday letting tax.

The book itself is suitable for any of the following:

  • Existing furnished holiday letting owners
  • Prospective holiday home purchasers looking to let their second homes
  • Those considering converting barns or out buildings into furnished holiday lettings

How do I obtain a copy of Furnished Holiday Lettings – A Tax Guide – 4th Edition?

To order your copy now please click here.

Boshers offer specialist holiday home insurance to owners across the UK. Require a quote for your holiday apartment, cottage or complex? Please give us a call on 01237 429444.

Insurance Premium Tax

HMRC launch tax initiative open to holiday homeowners

As a holiday home owner does getting the best possible terms on the tax you have to pay on your property sound like an attractive proposition? HMRC Let Property Campaign allows those who haven’t declared letting income to do so!

HMRC Let Property CampaignWe’re currently highlighting the ‘Let Property Campaign’ being run by HM Revenue and Customs (HMRC) that is open to those renting out a holiday home to paying guests and have yet to declare the income.

How do you get the best possible terms for your tax payment?

If you currently owe tax from the letting income gained from your holiday home you’ll need to declare that income by making what is called a voluntary disclosure to HMRC. In order to gain the best possible terms for your tax on this income you’ll need to do one of two things:

  • Complete the HMRC Let Property Campaign Notification form which you can access by clicking here – HMRC Let Property Campaign 
  • Call the Let Property Campaign Helpline on 03000 514 479 to discuss your options.

Once you have consulted the helpline or submitted your notification form you’ll have three months in which to pay your tax bill.

What do you do if you’re unsure if you need to declare tax under this scheme?

If you’re currently unsure if you have unpaid taxes for your let property or if you should be declaring taxes under this scheme you can visit this link – HMRC Let Property Campaign Questionnaire

You’ll answer a few simple questions and gain guidance on what you need to do that is specific to your circumstances.

The risks of not declaring tax on your holiday letting income

If you’ve made an error in paying or calculating your tax bill as a result of misunderstanding or deliberately paying the wrong amount it is strongly advised that you inform HMRC of any mistakes before they discover them.

The HMRC are actively cracking down on tax evasion by all landlords, whether residential or in this case those who rent out holiday homes. They’ll use information they have about the property, the marketplace and other information they hold on customers to identify people who might not have paid what they owe.

If you don’t make a voluntary disclosure now and HMRC finds out later, you could suffer higher penalties and face criminal prosecution.

Please remember this article is only a general outline of the tax schemes offered by HMRC. If you are looking for tax information or advice please contact HMRC directly or seek professional advices.

Useful Links:

Learn more about HMRC tax campaigns by watching this video 

The vast majority of holiday home owners who let their property reading this will already be declaring the income received after offsetting allowable running expenses such as their holiday home insurance premium. As holiday home insurance specialists we understand the needs of holiday letting owners and our policy includes valuable legal expenses cover for HMRC taxation investigations provided that the insured has taken reasonable care to submit complete tax returns within statutory time limits. For more information on how a specialist insurer can help and support your holiday home business, please give us a call on 01237 429444. 

Last chance for holiday home owners to comment on new holiday let rules. New rules on furnished holiday lets will make it more difficult to let certain properties, reduce the number available and act as a barrier to new entrants to the industry. That is the verdict of a Westcountry expert on holiday lettings who is urging affected businesses to express their concerns to Government before consultation on the new rules ends next week (February 9).

John Endacott, tax partner at accountants Winter Rule in Truro and a prominent commentator on the issue of furnished holiday lets, said the revised rules would lead to significant changes in the industry.

They say that holiday lets must be available to let for 205 days in a year (up from 140) and actually let for 105 days in a year (up from 70), which could see more marginal properties in less popular areas fail to qualify. The Government is also tightening up on the ability to offset trading losses against profits, something which Mr Endacott said could deter new entrants to the industry trying to let properties with no letting record. He said: “I’ve no doubt that these new rules will result in consolidation in the industry because the lettings targets are going to be onerous for some owners and planning restrictions may actually prevent some properties from meeting the 210 day requirement.

“The new regime around trading losses is also very restrictive and means it will take a very long time to get tax relief on start-up losses. That will be a barrier to new entrants and high investment into single units does not look like a good business model.”

Mr Endacott said the new rules would probably lead to more owners with greater numbers of furnished holiday lets, but he was hopeful that owner-occupiers of holiday let complexes may be exempt. He added: “Winter Rule will be making further representations to the Government before next week’s deadline so if anyone wants to get in touch they can email me at”

Tax Specialist, John Endacott of Accountants, Winter Rule welcomes the Emergency Budget announcements on the Furnished Holiday Let Rules.   

He commented; “The announcement today is in line with my most recent discussion with the Treasury specialists. I cautioned against premature action and stressed the need to better research the potential impact of any changes. Part of this was asking for any changes to be deferred until April 2011 to allow for further consultation. That has now been promised and I hope it leads to a better thought through solution to the government’s concerns.

For owners of complexes then it may be more appropriate to be reclassified as a true trade and we await a clear view from H M Revenue & Customs on that. As far as the new furnished holiday let rules are concerned then it is important that any tightening up of the qualifying criteria does not penalise very seasonal locations or prevent new businesses entering the sector.”