Essentially, there are three changes:
1. The treatment of properties in the European Economic Area (EEA)
From 2009/10, properties in the EEA in addition to the UK have qualified as Furnished Holiday Lettings (FHLs). UK properties are treated as one ‘business’ and those in the EEA as another.
2. The period for which a property must be available for let and is actually let
- Availability test – during the tax year, the accommodation is available for let to the public for at least 140 days, but this will increase to 210 days from 2012/13
- Occupancy test - during the tax year, the accommodation is actually let to the public for at least 70 days, but this will increase to 105 days from 2012/13
- Pattern of occupancy – the property must not be let for periods of “longer term occupation” for more than 155 days during the tax year. A “longer term occupation” is a letting to the same person for longer than 31 consecutive days
3. The offset of losses
Any losses made may only be offset against profits from other properties in the same FHL business or carried forward to utilise against from the same FHL business. So you could not offset losses from the UK FHLs against profits from the EEA FHLs, because these are separate businesses.
Prior to April 2011, you were able to utilise FHL losses against other income.
If you would like some accountancy and tax advice regarding your FHL portfolio, please feel free to contact your local TaxAssist Accountant.
By Jo Nockels
Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.