The acquisition of a holiday letting property/ies has certain tax advantages when compared to letting residential property.
What is a FHL? A property in the UK or Europe (EEA) which must be let on a commercial basis with a view to making a profit. All UK FHL are treated as a single business and all EEA FHL are a separate business to the UK one. Losses from one cannot be off set against the other but may be carried forward to be deducted from future profits of the same business. Losses cannot be set against other general income such as employment income.
What is a FHL? A property in the UK or Europe (EEA) which must be let on a commercial basis with a view to making a profit. All UK FHL are treated as a single business and all EEA FHL are a separate business to the UK one. Losses from one cannot be off set against the other but may be carried forward to be deducted from future profits of the same business. Losses cannot be set against other general income such as employment income.
The advantages of Furnished Holiday Lettings are :
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To qualify as a FHL, the property must be available in the year for 210 days (30 weeks) and must actually be let for 105 days (15 weeks). If it is occupied by the same person/s for a period of more than 31 days there can only be 155 days of such occupation in the year.
If in any one year these occupancy tests are not met and where there was a genuine intention to let, it is possible to make an election for the year to qualify provided that the previous year did qualify. This election can be made for two years and the first year must have qualified. By the fourth year the occupancy tests need to be satisfied again in order to carry on being treated as a FHL.
If there are several properties and one does not meet the 105 day test it is possible to average all properties so that they may all meet the test and still continue as a qualifying FHL.
If in any one year these occupancy tests are not met and where there was a genuine intention to let, it is possible to make an election for the year to qualify provided that the previous year did qualify. This election can be made for two years and the first year must have qualified. By the fourth year the occupancy tests need to be satisfied again in order to carry on being treated as a FHL.
If there are several properties and one does not meet the 105 day test it is possible to average all properties so that they may all meet the test and still continue as a qualifying FHL.