HMRC has published the results of its consultation on plans to tighten up the Furnished Holiday Lettings rules.
While most of the proposals will go ahead, some important changes have been made to address issues raised by the NFU and others.
The new rules will be as follows:
- A qualifying property must be available for letting to the public for 210 days a year.
- A qualifying property must actually be let to the public for 105 days a year.
- Losses made in a FHL business may only be set against profits from the same FHL business.
- There will be no changes to the Capital Gains Tax rules affecting furnished holiday letting properties.
The NFU and others expressed concern that due to the higher level of lettings required, some owners may meet the criteria in some years but not in others. In addition, we made the point that some businesses may not meet the criteria in a particular year as a result of factors outside of their control, such as flooding or movement restrictions.
Those issues have, to some degree, been addressed with the following additional measures:
- The increased availability and occupancy conditions will apply from April 2012 rather than April 2011, allowing operators more time to advertise their properties to seek extra bookings.
- Businesses which meet the qualifying requirements in one year can elect to be treated as if they will meet the criteria in the next two years, provided certain other, as yet unpublished, criteria are met. (The criteria is as yet unpublished).
While we're satisfied that the government has sought to address some of our concerns, we would have liked to have seen more done to assist those FHL businesses in more remote parts of the country, which will have constant difficulty in meeting the new rules.
We lobbied long and hard to see off the original proposals to repeal the concessions entirely and were pleased when that idea was dropped in the Emergency Budget earlier this year.
See also: Our shout on holiday lets taxation
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