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Furnished Holiday Homes Lettings Consultation – 65,000 Britons set to benefit from changes
Draft clauses published today from the Finance Bill have revealed the outcome of the Furnished Holiday Lettings (FHL) consultation. An estimated 65,000 anxious UK holiday home owners now have a clear understanding of what the forthcoming changes are – and more importantly, exactly how they will affect them. The Treasury’s changes will be applied in two stages.
Changes applicable from April 2011
To restrict the use of loss relief from FHLs. When the proposed changes are made, holiday home trading losses will only be able to be offset against future profits from the same business. Under the existing rules, owners can offset trading losses from a holiday home against any other sources of income.
For a profitable holiday let business loss relief is not a huge concern, however for new entrants and farmers who currently offset losses against farm or other income it could be.
A ‘period of grace’ will be introduced to allow businesses that don’t continue to meet the actual let period for one/two years to elect to qualify throughout that period.
This will essentially help those that struggle to meet eligibility criteria year on year, allowing them time to get back on track and supporting their ambitions to be a thriving holiday let business.
Changes applicable from April 2012
To raise the eligibility criteria; to qualify for FHL tax breaks owners must let a property for an annual minimum of 105 days/15 weeks (raised from 10 weeks)
The property must also be available to let for an annual minimum of 210 days/30 weeks (instead of 20)
This will allow new entrants to the holiday home industry, and those currently struggling to meet the criteria, a significant amount of time to focus their marketing, in order to increase their occupancy.
Kate Stinchcombe-Gillies from Holiday Lettings™
Kate Stinchcombe-Gillies, spokesperson for Holiday Lettings™, says: “This is a very well rounded and thoroughly considered response from the Coalition. While the changes to loss relief may raise some concerns for new entrants and possibly farmers, the other changes are very welcome.
“The introduction of the grace period for those who struggle to continually meet the eligibility criteria generously rewards those who support the self-catering industry and local tourism, but may suffer a bad year for reasons beyond their control. Generous too is the delayed introduction of the increased letting and availability thresholds until 2012.
“Long term these proposals will protect the self-catering industry in the UK and Europe and the professional holiday home landlord as well as increasing the incentives for part time landlords to make their properties available for more of the year.
Long term, these proposals will protect the self-catering industry in the UK and Europe
“Compared to Labour’s previous proposals to completely withdraw Furnished Holiday Lettings tax reliefs, common sense appears to have prevailed.”
As the UK’s leading holiday home website, with more than 40,000 holiday homes worldwide, of which 8,000 are in the UK, Holiday Lettings™ had campaigned against the previous government’s proposed repeal of FHL tax benefits. Fully aware of the impact any changes to these reliefs could have on holiday home landlords but also the self-catering industry as a whole, Holiday Lettings has fully supported the proposed revision by the Coalition.