A furnished holiday letting (FHL) offers many tax advantages over a residential property letting. For a let property to qualify as a FHL it must meet the following conditions:

  • The property must be in the UK.
  • There must be sufficient furniture provided for normal occupation and visitors must be entitled to use the furniture

The property must meet the following occupancy conditions during a tax year or when starting to let in the first twelve months:

  • The property must be available for letting as furnished holiday accommodation for at least 210 days in the year.
  • The property must be let commercially fully furnished (at a commercial price, not cheaply to family or friends) for at least 105 days in the year. Lets of more than 31 consecutive days should not be included.

In certain situations it maybe possible to continue treating income from a letting as a furnished holiday letting even if during the tax year the property was not let out for 105 days or more. Advice should be obtained from an Accounting or tax advisor regarding this before completing a tax return.

Allowable expenses for lettings include:

  • Agents fees
  • Cleaning
  • Repairs
  • Replacement or refurbishment on a like for like basis

Additional allowable expenses and benefits of a FHL over a standard residential let include:

  • Plant and machinery capital allowances for items such as furniture, equipment and fixtures can be claimed.
  • Interest in full on a mortgage is an allowable expense.
  • The profits count as earnings for pension purposes.
  • When you sell the property you may be able to claim some Capital Gains Tax Relief,

This information is correct as at 6 April 2021. It has been provided by Spicer’s Accounting Services for information purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax or accounting advisor before taking any decision.