Holiday home owners benefit from extended tax window…...
....
but not forever? 
The Chancellor’s announcement in the Emergency Budget to keep the tax breaks for holiday homes was a boost for their owners and the leisure industry in general, as the Furnished Holiday Lettings tax regime had been due for abolition from April 2010. HMRC’s subsequent announcement on 22 June on the rules affecting the owners of holiday rental properties extends to April 2011 the period for which the minimum number of letting days required for a FHL is 70 per annum.
Whilst this is good news for second home owners in particular who rent out their holiday homes, the ‘sting’ in the tail is that HMRC’s announcement makes it clear that there is likely to be an increase in the number of days required for the property to be let out in order to benefit from tax breaks after April 2011, as well as other changes.
Stephen Barratt Private client Tax Director at James Cowper comments: “These changes will affect individuals who follow the rules and let their property for close to the minimum of 70 days per annum but also use it for their own holiday benefit at other times. It is a way of penalising second home owners and could force many to choose to sell their properties ahead of the April 2011 rule change. Others will need to reconsider whether or not to make a purchase.”
Stephen concludes: “The detail is awaited but the new coalition government is looking to raise the bar before the owners of these properties get the tax benefits of ownership and I would urge anyone with a holiday property, or looking to buy one, to keep a close eye on how things develop over the coming months and how changes will affect their individual circumstances and plans. This could also lead to a particularly significant impact on the property market in a number of areas of the country.”
Stephen Barratt, Private Client Tax Director, James Cowper LLP, Tel: +44 (0)1635 35255 or email: sbarratt@jamescowper.co.uk
19.07.2010