We want your verdict on new changes to the tax rules on furnished holiday lettings.
Following a successful NFU lobbying campaign, plans to repeal the advantages currently in place were dropped. The government did, however, announce that some revisions will be made to the regime from April 6 2011 and is currently consulting on what the impact might be.
Chief among the changes is an increase in the number of days that the property has to be available for letting, from 140 to 210, and a similar increase in the number of days it must actually be let, from 70 to 105. There is also a move to restrict the use of loss relief so that it can only be used against future profits of the FHL business.
If you are an NFU member with specific concerns over these proposals, contact our head of tax, Michael Parker, on 02476 858722.
The current rules for FHLs give a number of tax advantages provided that the property meets a number of qualifying conditions. Favourable treatment includes profits counting as earnings for pension purposes, the ability to claim capital allowances, the ability to set losses against other income, business asset roll-over relief and gift relief for capital gains tax purposes and Entrepreneurs’ Relief.
- Full details of the government consultation can be found here.
- Get more news from the NFU on taxation issues here.
- Nick Gray - 15/09/2010
We have been running our business for 18 months, and have occupancy levels in excess of 105 days per year. This has been achieved with considerable investment (largely supporting local building businesses and craftsmen)and at a financial loss so far. Without being able to offset this loss against our other income, we would not have been able to afford to grow our business and make the contribution to the local economy and tourism that we have. While we are looking at what will be a profitable enterprise in the next year or two, removal of the ability to offset losses against other income is a serious disincentive to investing further in the business.
- Judith James - 21/08/2010
It took our business 5 years to reach a steady 15 weeks (105 day) let. The relief rules should at least have a new start taper allowance otherwise the conditions are very much against new start up businesses when the reliefs make a real difference. Offset against other earnings and other reliefs are also vital to encourage long term investment in this sort of business. One reason for the tax review given was that the tax benefits did not comply with other EU country approaches. Our own experience with Italy is that local agritourismo's get very good grants, loans and other subsidies - perhaps NFU could formally review these.
- H Eddon - 19/08/2010
15 weeks let is not an unreasonable amount for someone letting properties as a business. Business asset rollover is more important as if this is not available it could affect the viability of the whole farming business when transfering on to the next generation.