Furnished holiday lettings - May 2009
When does a let property qualify as a furnished holiday let?
A reminder of the rules for a property to qualify as a furnished holiday let:
- it must be furnished (such that a tenant could move in without having to buy anything)
- it must be in the UK
- it must be available for (commercial) letting for at least 140 days in the year
- it must be actually let for at least 70 days
- it must not normally be let out to the same person for more than 31 consecutive days in any 5 month period
A property may qualify one year but not the next and it is important to maintain a record of this in order to take advantage of the tax benefits of holding furnished holiday accommodation whilst they are still here!
Business property relief on furnished holiday lettings
It is well understood that Business Property Relief (BPR) is not available to reduce the value of a Furnished Holiday Letting on death or in the course of a gift. However, this does not have to be the case. In order to make a claim for BPR the owner must show some level of involvement in the management of the properties. In particular:
- the letting should be short-term (e.g. weekly or fortnightly) and
- The owner, either himself or through an agent (including the owner's spouse), is substantially involved with the holiday-makers in terms of their activities on the premises
It is clear from this that there must be something of a service provided rather than the mere letting of a property. Typical services could include meeting & greeting, arranging for cleaning and laundry to be done, supplying basic food items such as milk & bread on arrival, offering advice on tourist information etc. These are many of the services you would expect to be offered, for example, at a hotel.
Finally, it is important to keep a record of the services provided, maybe a standard checklist on which services taken up can be ticked off and then kept as a permanent record.
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