Following the change in rules relating to the taxation treatment of buy-to-let properties (see our 18 July 2017 article Furnished Holiday Lets – The Alternative to Buy-to-Let?) furnished holiday lettings have become more attractive for investors.
However, in his October 2018 Budget Statement, the Chancellor highlighted that some owners of properties that are not genuine businesses are seeking to reduce their tax liability by falsely declaring that the property is available to let. This is one of the key conditions to qualify for the favourable tax treatment offered for properties let as fully furnished holiday accommodation.
In response, and to ensure that second properties are subject to appropriate tax, the government announced a consultation on the criteria under which self-catering and holiday lets will be chargeable to business rates rather than council tax.
Pending the outcome of this consultation, it would be sensible for owners of furnished holiday lets to ensure that they are meeting the criteria to qualify as a business.
If you would like any advice in relation to furnished holiday properties or buy-to-let properties please contact Glyn Evans on 01934 637911 or firstname.lastname@example.org.