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The furnished holiday let (FHL) rules allow holiday lettings of properties that meet certain conditions to be treated as a trade and therefore qualify for additional tax benefits.
In order to qualify as a FHL, the following criteria need to be met:
There is a special period of grace election which allows homeowners to treat a year as a qualifying year for the purposes of the FHL rules where they genuinely intended to meet the occupancy threshold but were unable to do so subject to a number of qualifying conditions.
In any other cases, where the qualifying conditions are not met the normal property income rules apply. Trading losses from a furnished holiday lettings business can only be set off against qualifying future FHL profits.
As we approach the end of the tax year now is an opportune time to review your occupancy statistics for the current tax year, 2017-18. This should be done to ensure that you will meet the minimum qualifying requirements to qualify as an FHL. If these requirements are unlikely to be met there is still time to consider you options. If you need help in checking these numbers, or discussing your tax options regarding your lettings activity, please call.
Source: HM Revenue & Customs | 10/01/2018