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Furnished Holiday Lets - Income Tax

Income from property let as furnished holiday accommodation is broadly treated as income arising from a trade consequently, considerable tax benefits arise.

The income constitutes net relevant earnings for pension purposes, capital allowances are available on furniture and equipment and until 05/04/2011 losses can be offset against other income.

From 6 April 2012 for accommodation to qualify as furnished holiday accommodation, a number of conditions must be met, including:

  • The property must be situated in the European Economic Area.
  • The property must be let on a commercial basis.
  • It must be available for let for at least 210 days a year.(previously 140 days)
  • It must actually be let for at least 105 days a year.(previously 70 days)

Total periods of longer term lettings ( ie lets longer than 31 days) must not exceed 155 days per annum.

Timing of Tax Payments

Income Tax payments on your income from Furnished Holiday Lets are normally made on 31 January and 31 July in two equal instalments followed by a balancing payment the following January.

For the fiscal year ended 5 April 2015, tax will be payable partly on 31 January 2015, partly on 31 July 2015 with a balance payable on 31 January 2016.

The first two 'instalments' are initially calculated as 50% of the tax due based on your profits for the previous year. However, in the first year care needs to be taken as no 'instalment' payments will have been made and therefore in the above example the whole tax liability would be due on 31 January 2016.

Letting furnished holiday accommodation and need to know more about the income tax consequences, contact bb@moco.co.uk

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