UK Furnished Holiday Lettings: 2010 onwards
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2010/11 onwards |
Tax changes |
Where do you stand? |
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As of the 2010/11 tax year, the current Furnished Holiday Lettings (FHL) rules will repealed. This means that certain tax benefits will no longer be available to owners who rent out their furnished holiday homes in the UK. Find out more about the current rules and the forthcoming FHL changes.
You'll also want to know how furnished holiday letting accommodation will be treated by the taxman from next year. Digest the information below and be sure to talk your situation through with an accountant or tax advisor if in any doubt.
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Short term holiday accommodation will be treated in the same way as residential lettings for tax purposes.
What does this mean?
You can deduct ‘allowable expenses’ from your rental income to get a net profit. These include:
Letting agent fees (if applicable) Council tax Maintenance and repair costs Utility bills Interest on mortgage payments Buildings and contents insurance Additional running costs such as cleaning and gardening services Advertising fees
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You can also deduct a further ‘wear and tear’ allowance, which is based on a percentage of the rent, or a ‘renewals’ allowance, which is the cost of replacing an old item with a new one (minus any sum gained if the old item was sold).
The resultant sum is your taxable profit
Then what?
The taxable profit from rental income is added to your overall taxable income.
You can offset any losses made against any profit made from letting another property, but not against your overall income (as you can under the current FHL rules).
You can also carry forward any losses to offset against lettings profits in future years
