Furnished Holiday Lets and Capital Allowances

Whilst it is well-known capital allowances tax relief is available for hotels or bed & breakfast establishments, furnished holiday lets also have access to this relief under the correct conditions.

Furnished Holiday Lets and Capital Allowances

Holiday Lets and Capital Allowances

The landscape for worldwide holidays has yet to fully recover following the pandemic, and it’s clear the UK holiday market is still booming, with many people opting for holidays a little closer to home to avoid the current airport chaos.

Given the UK has some of the most beautiful countryside & coastal spots, such as in the photo of Runswick Bay in North Yorkshire above, in the world, combined with the self-contained nature of furnished holiday lets, it’s not hard to understand why this type of UK holiday accommodation is still so incredibly popular with holidaymakers.

Because of the current exceptionally high demand for UK holiday accommodation, owners of furnished holiday lets should consider the tax benefits they are entitled to and maximise their increased income.

Whilst it is well-known capital allowances tax relief is available for hotels or bed & breakfast establishments, furnished holiday lets also have access to this relief under the correct conditions.

What is a Furnished Holiday Let?

For a property to be classed as a furnished holiday let, it must meet a very strict criterion set by HMRC. The reason for this is to allow HMRC to make a clear distinction between a residential property that is occasionally let out to holidaymakers or friends & family (which does not qualify for tax relief) and a genuine commercial holiday letting activity.

The following must be met for the property to be classed as a furnished holiday let

  • The property must be situated in the UK
  • The property must be furnished.
  • The property must be commercially let (you must intend to make a profit).
  • The property must be available for commercial letting as holiday accommodation to the public for at least 210 days in the relevant 12-month period (the tax year).
  • Out of those 210 days, the property must actually be let out for 105 days or more as holiday accommodation.
  • Long term occupation (let for 31 days or more to a member of the public) must not exceed 155 days in the tax year. Any period of long-term letting cannot be counted towards the 105 days of commercial holiday letting required to qualify.

Claiming furnished holiday let capital allowances tax relief

In order to claim capital allowances on a furnished holiday let there must not have been a previous capital allowances claim carried out by any prior owner(s) of the property.

Furnished holiday lets are frequently owned by individuals rather than companies. If the owner is a higher-rate taxpayer, a potential capital allowances claim can save paying 40% tax on furnished holiday let income! A saving not to be missed!

Capital allowances can only be claimed against furnished holiday let profits. Any losses created by furnished holiday let capital allowances cannot be offset against any other income. Therefore the furnished holiday let must be profit-making to benefit from a capital allowances claim.

With an estimated capital allowances claim in the region of 25% of the purchase expenditure, there could be substantial tax relief just waiting to be unlocked.

Holiday Let Mortgages

Wattsford Commercial Finance

Wattsford Commercial Finance is a leading provider of holiday let mortgages. Holiday let properties are located in places that attract holiday tourism. There are many parts of the UK that individuals, families, friends and groups will visit to explore, relax and unwind.

For more information on holiday let mortgages, visit Wattsford Commercial Finance, a Wattsford Family Brand

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