Furnished Holiday Lettings
Furnished Holiday Lettings
Furnished Holiday Lettings in the European Economic Area
The rules governing overseas furnished holiday lettings (FHL) have changed. Individuals who let accommodation qualifying under FHL are currently treated as trading for tax purposes.
HM Revenue & Customs have changed the rules applying to FHLs in the wider European Economic Area bringing them into line with FHL in the UK.
Current Position and Losses
Following the 2009 Budget, losses arising from qualifying overseas Furnished Holiday Lettings (FHL) within the European Economic Area are available to offset against other income. However, the overseas property rental must meet requirements to be treated as FHL otherwise it will be taxable under normal rules for overseas property income. Any losses from the overseas property, not treated as a FHL are available to carry forward against future non-qualifying income from overseas property.
Position from 6 April 2010
Stop Press!
The proposal to repeal the furnished holiday letting legislation announced in the 2009 Budget has been now been dropped from the 2010 Finance Bill.
Current benefits of qualifying FHLs include:
- loss relief claims;
- capital allowances on expenditure such as furniture and furnishings, white goods and carpets;
- capital gain tax reliefs including business asset rollover, holdover and entrepreneurs relief;
- business property relief for Inheritance Tax.
The existing rules will continue to apply during the tax year ended 5 April 2011 but the government is considering introducing changes to the rules with effect from 6 April 2011.
Further Information
If you would like to discuss how the rules relating to your own Furnished Holiday Lettings, either in the UK or further afield, are likely to affect you, please contact me.