Changes to Holiday Lets Tax Relief

 Sorry to be the bearer of bad news, but I read yesterday that the government announced changes to the taxation of furnished holiday lets last week, to come in as from next April. 

The key changes are:  

*The property must be available to rent for 210 days per year (currently 140)

* The required period for the property actually to be let goes up from 70 days to 105 days per year

* Losses from Furnished Holiday Accommodation can only be set off against profits from other furnished holiday accommodation

I interpret this to mean that losses such as mortgage and maintenance costs can't beoffset against income tax anymore.

And to make matters worse there is also a suggestion that foreign holiday letting and UK holiday letting will be classed as different businesses hence loss from one can not be offset against a profit on the other!

Yes you can still offset mortgage etc against the income from the property.

I far as I ama asware, UK and Foreign property has always been assessed separately!

What the change means is that if you have several properties in the UK - some holiday lets and others long term lets - then EACH CATEGORY will be assessed on its own. So for example if you make a loss on a furnished holiday property and a profit on a unfurnished long term let one, you cannot offset the profit on one against the loss on the other. You will have to pay the tax due on the one in profit but you can carry forward  the loss on the other one and offset against any profit you make on it in future years.

There is some more info on the Holiday Lettings website - http://www.holidaylettings.co.uk/pressrelease.asp?article=143&utm_source=newsletter&utm_medium=email&utm_campaign=honews-julyfhl

Clear as mud? Phone the Inland Revenue - they are actually very helpful, and no I've never worked for them just had great service and help over the years on my rental properties.