Furnished Holiday Lettings - changes to tax rules
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In the April 2009 Budget, changes were made to the rules for Furnished Holiday Lettings. These changes will potentially affect owners who let their UK holiday home out on a short term basis and who are liable to pay UK tax. Owners liable to pay UK tax who rent out furnished holiday accommodation in the European Economic Area (EEA) will also be affected by the new rules.
Before you read about the changes, make sure you're aware of the current rules for Furnished Holiday Lettings. This explains what qualifies as Furnished Holiday Letting accommodation and what this means for tax purposes. Full details of the changes are available through HM Revenue & Customs.
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There's also a link to more information at the end of this article, including a short online questionnaire that may help you establish whether you qualify for a tax rebate.
Source: hmrc.gov.uk/budget/2009
What are the changes?
On April 6 2010 the rules for furnished holiday letting accommodation in the UK will be repealed. The current advantageous tax treatments available to owners of such properties will no longer be available. These include certain capital gains tax (CGT) reliefs, capital allowances and offsetting any losses.
Until the current rules are repealed, they are being extended to owners of furnished holiday accommodation in the EEA who are also liable to pay UK tax. Such properties will need to meet the same criteria as furnished holiday letting accommodation in the UK to qualify.
Will Furnished Holiday Lettings rules automatically apply to a property in the EEA?
No. However, if you do want to benefit from the changes for the tax year ending in April 2009 and your home is in the EEA you will have to submit an amended Self Assessment tax return for the 2008/09 tax year, or make a claim directly in writing with HM Revenue & Customs.
If you want your property to count as a furnished holiday letting, all of the rules will apply.
How do I apply for my EEA property to benefit from Furnished Holiday Lettings treatments?
To claim for the present tax year (2009/10) you will need to submit a Self Assessment tax return next year and claim for the relevant treatments or reliefs as if your property were in the UK.
If you want to amend an existing tax return/claim for previous years, then you will need to submit an amended tax return by January 31 2010 for the 2008/09 tax year and January 31 2009 for the 2009-10 tax year.
If you are within the normal time limit for amending your Self Assessment tax return, you should send an amended form to HM Revenue & Customs. You must include any rental income and expenses from the qualifying property in the Furnished Holiday Lettings section (in the Property Pages) of your tax return.
If you are unable to amend your tax return but are still within the normal time limit, you should make the claim by writing to your local HM Revenue & Customs office.
If you do not use Self Assessment tax returns or are unsure about how these changes will affect you, we recommend you phone your local tax office or consult a professional in the field.
What happens if I want to make a late claim/amendment?
