The End of Furnished Holiday Lets by Mitch Young

 

As you may be aware the biggest surprise to come out of the 2009 Budget was the announcement that furnished holiday lets will be abolished from 6 April 2010.  A property  is treated a furnished holiday let if it is let on a commercial basis with a view of realising a profit and meets the following conditions:

1.       Must be available for commercial letting to the public as a holiday accommodation for at least 140 days

2.       It must be let for 70 days

3.       During the year not more than 155 days may fall into periods where the property is in the same occupation for a continuous period exceeding 31 days.

Previously the landlords would be entitled to the following special tax treatments

·         Entrepreneurs Relief

·         Relief for trading losses – Can be used against other income

·         Qualifying earnings for pension contributions

·         Capital Allowances

·         100% Business Property Relief

From 6 April 2010 Furnished Holiday lets will be treated as any other let property.  Thus you may want to consider taking action immediately in order to get the most out of the previous tax benefits on offer.  For example if you want to cease carrying on a furnished holiday letting trade then you may wish to sell the property prior to 6 April 2010 in order to claim entrepreneurs relief.  Or you may want to gift the property and in take advantage of hold over relief.

Speak to your tax adviser immediately if you do hold a furnished holiday let as they may be able to plan effectively in order for you to make the most out of the remaining tax reliefs.