Furnished Holiday Lets - An Opportunity?

June 11th 2009

The rules regarding furnished holiday lets are changing but there is an opportunity to take advantage of an extension of the rules.  However, there is a deadline of 31 July 2009 to benefit from this.

From 6 April 2010 the furnished holiday letting (FHL) rules will be repealed because HMRC have operated them in a way that was potentially non-compliant with European law.  These measures currently treat landlords as trading for certain tax purposes provided that they satisfy certain conditions.  Until the FHL rules are repealed, HMRC will extend these rules to furnished holiday accommodation elsewhere in the EEA, but not outside it.  Furthermore there is scope to go back and amend previously submitted returns. 

Until 31 July 2009, HMRC will accept late amendments to:

• income tax and capital gains tax returns for the tax year ending 5 April 2007; and
• corporation tax returns for accounting periods ending on or after 31 December 2006.

The amendment must relate to one of the reliefs or other treatments available under the FHL rules, for a property situated in a country elsewhere within the EEA during the relevant period, and the letting meets all the other requirements of the FHL rules.

The reliefs include:

• Loss relief against general income;
• Pensionable profits;
• Various capitals tax reliefs, including entrepreneurs’ relief.

For advice and assistance please contact Lindsey Sherman on 07545 018438 or email lsherman@edftax.co.uk.