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The tax advantages of Furnished Holiday Lets

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Steve J Bicknell

Traditional Old English Cottage with Thatched Roof

There are special tax rules for rental income from properties that qualify as Furnished Holiday Lettings (FHLs).

If you let properties that qualify as FHLs:

  • you can claim Capital Gains Tax reliefs for traders (Business Asset Rollover Relief, Entrepreneurs’ Relief, relief for gifts of business assets and relief for loans to traders)
  • you are entitled to plant and machinery capital allowances for items such as furniture, equipment and fixtures
  • the profits count as earnings for pension purposes

https://www.gov.uk/government/publications/furnished-holiday-lettings-hs253-self-assessment-helpsheet/cvgg

In addition:

  • The Interest Rate Relief Restrictions don’t apply – these rules only affect Buy to Let Investors
  • Losses can be set against total income and are not restricted to the rental business; PIM4200 onwards deals with normal rental business losses and PIM4130 deals with furnished holiday lettings losses.

The letting condition

You must let the property commercially as furnished holiday accommodation to the public for at least 105 days in the…

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