Furnished holiday lettings
The measure
Legislation will be introduced in the next Finance Bill to bring the tax treatment of furnished holiday lettings (FHL) businesses in line with the rules for other property businesses.
Who will be affected?
This will affect individuals, partnerships, trustees and companies who rent out accommodation which has to date qualified as a furnished holiday letting.
Currently, FHLs potentially benefit from more flexible loss relief, additional capital allowances, certain capital gains reliefs and relevant UK earnings treatment for pension purposes.
Individuals relying on income from FHLs to maximise pension contributions will therefore see a reduction in their pensionable earnings.
When?
The measures take effect from 6 April 2010. Until they do, the FHL rules apply to furnished holiday lettings anywhere within the European Economic Area.
To date, the tax treatment of FHLs has been more flexible than for other
property. The repeal of the FHL rules, bringing them in line with those for
other land and property, was announced at the time of the 2009 Budget.
The release of draft legislation and additional commentary today provides
further clarification on the measures already announced.
