Are you missing out on tax allowances for holiday accommodation?
If you own holiday accommodation and it is located in the UK or European Union then I have some good news.
When let furnished as holiday lets, these properties are treated as ‘Furnished Holiday Lets’ provided they are available for at least 210 days per year and are physically let for at least 105 days on a commercial basis with no single let lasting more than 31 days.
The current rules allow you to treat that rental income as business income, but more significantly allow you to claim additional allowances known as capital allowances, as well as obtain a beneficial rate of tax on any future gain on disposal.
Capital allowances allow you to claim for a proportion of any expenses you have incurred with regards to both the furnishing of the property and in some circumstances with regards to a proportion of the actual purchase of the property itself. These allowances therefore help to reduce any taxable profits that you have with regards to these properties, and thus reduce your tax bill.
One form of capital allowances which has been often overlooked is that of integral features, which in plain English is basically anything other than the bricks, mortar and tiles that make up your property and can include such items as pipes, kitchens and bathroom equipment, electrical wiring or air-conditioning or other such features which may be built into the property itself. These integral features can be valued by an appropriately qualified surveyor and once the claim is made, can often result in a tax refund/reduction.
In addition, should you wish to sell your Furnished Holiday Let to take advantage of a capital gain, then provided that it has always qualified to be treated as such, the tax on the gain should be limited to 10%.
Of course, if you do not currently own your own holiday home, but wish to in the forthcoming months or years, you could find that you may benefit from using The Ultimate Onshore Tax-Efficient Trading Structure.
Other articles you may find useful...
- The Ultimate Onshore Tax-Efficient Trading Structure
- Tax planning tip for non-domiciled individuals.
- HM Revenue and Customs targeting multiple property owners