New restrictions on holiday let tax relief
Wellden Turnbull accountants are advising owners of properties used for Furnished Holiday Lettings (FHLs) that may have to make them available to let for longer in future – or risk losing the tax relief they attract.
In future, FHLs elsewhere in the European Economic Area will be treated in the same way as homes in the UK – but as a result, the tax relief currently available is likely to be less generous.
Robin John from Wellden Turnbull said “Homes currently need to be available for at least 140 days a year and actually let for at least 70 days in order for the owner to receive entrepreneurs’ relief and roll-over relief on their Capital Gains Tax (CGT).
“However, it is planned that the Treasury would increase the qualifying period to 210 days and 105 days, respectively.
“In addition, losses made in a qualifying furnished holiday lettings business, may only be set against income from that business and not general income, as under present rules”.
For companies, the proposed changes would take effect from accounting periods beginning on or after 1 April 2011, while for individuals they would apply for the tax year 2011/12 onwards.
Consultation on the proposals will run until 22 October, and the government has said it will publish its response by the end of the year, with any changes being implemented in the 2011 Budget.
For further enquiries please call Katie Smith on Tel: 01932 584787 or email k.smith@wtca.co.uk