Furnished holiday lettings
The previous government had stated that the furnished holiday lettings (FHL) rules would be withdrawn with effect from 6 April 2010. It has been announced today that this change will now not take place. The rules allow holiday lettings that meet certain conditions to be treated as a trade for some specific tax purposes and can be particularly beneficial from a tax perspective.
Who will be affected?
Individuals, partnerships, trustees and companies who let furnished holiday accommodation situated within the UK or anywhere else within the European Economic Area (EEA), and who are liable to UK tax on the income and capital gains from the property.
The FHL rules will continue to apply during the tax year ended 5 April 2011 in the same way as they previously applied. However, the government is considering introducing changes to the rules with effect from 6 April 2011. This might include increasing the number of days that qualifying properties have to be available and actually let as commercial holiday letting. Additional changes are possible. The government will consult over the summer on these plans.
We welcome the rules being reinstated and the fact that there will be a formal consultation process on future changes.