Archive for June, 2010

Tax Rollercoaster The tax rollercoaster on Furnished Holiday Lettings continues.  The previous government had stated that the furnished holiday lettings (FHL) rules would be withdrawn with effect from 6 April 2010.  However it has been announced at the Emergency Budget that this change will now not take place. The rules will allow holiday lettings that meet certain conditions to be treated as a trade for some specific tax purposes.  This is great news for all the individuals, partnerships, trustees and companies who let furnished holiday accommodation situated within the UK or anywhere else within the European Economic Area (EEA). So what are the advantages? Income Tax advantages Losses from a qualifying Furnished Holiday Let (FHL) can be set against other taxable income in the current or previous tax year.  For a property rental not qualifying as a FHL a loss incurred can only be set against other rental income rather than all taxable income.   Profits from a FHL are treated as earnings for pension contribution purposes. Capital allowance claims for expenditure on furniture and furnishings are available on a FHL.  Such items as washing machines, kitchen equipment, bathroom and sanitary wear, central heating, furniture, furnishings and insulation will qualify for either Plant & Machinery allowances or Integral Features allowances.  The existing rules allow the first £100,000 of qualifying expenditure for Capital Allowances to obtain the “Annual Investment Allowance” and a 100% tax write off.  Currently the FHL profits or losses do not necessarily have to follow the ownership of the property.  This can have tax…