{"id":4957,"date":"2022-12-07T16:31:06","date_gmt":"2022-12-07T16:31:06","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=4957"},"modified":"2022-12-07T16:31:08","modified_gmt":"2022-12-07T16:31:08","slug":"furnished-holiday-let-tax-what-do-you-need-to-know","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/furnished-holiday-let-tax-what-do-you-need-to-know\/","title":{"rendered":"Furnished Holiday Let Tax: What do you need to know?"},"content":{"rendered":"

A furnished holiday let (FHL) is a particular type of rental property classification in the UK.<\/p>\n

<\/p>\n

If your property qualifies as an FHL,\u00a0it is classed as a \u2018trade\u2019 by HM Revenue & Customs (HMRC), meaning you are entitled to various tax advantages.<\/p>\n

However, to be given FHL status, certain criteria must be met.<\/p>\n

Are you eligible?<\/strong><\/p>\n

To qualify, your property must be available for letting as furnished holiday accommodation for a minimum of 210 days per annum.<\/p>\n

Additionally, your property\u00a0must be rented out\u00a0to the public for at least\u00a0105 days out of the 210 it is available.<\/p>\n

Longer-term occupation of over 31 days should not be counted. However, an exception can be made if this is surpassed due to unforeseen circumstances such as illness and travel delays.<\/p>\n

What are the tax advantages?<\/strong><\/p>\n

There are several tax advantages and benefits that you should be aware of, such as:<\/p>\n

Capital Allowances<\/strong><\/p>\n

There are some capital allowances that can be claimed for FHLs, including expenses of refurbishing, or improving the property, as well as furniture and equipment.<\/p>\n

You can balance capital allowances against your income, meaning the tax you pay is reduced, and the profit you gain is preserved.<\/p>\n

Mortgage interest relief<\/strong><\/p>\n

Another notable advantage is that the full mortgage interest can be subtracted from the earnings of FHLs.<\/p>\n

This relief is limited to the basic rate of income tax (20 per cent).<\/p>\n

Pension contributions<\/strong><\/p>\n

The revenue you receive from this type of property is classed as Net Relevant Earnings (NRE).<\/p>\n

This permits you to make tax-efficient pension contributions.<\/p>\n

Capital Gains Tax (CGT) relief<\/strong><\/p>\n

Because FHLs are seen as business assets, they may qualify for some types of Capital Gains Tax reliefs such as:<\/p>\n