CAS - Sectors - Furnished Holiday Lets
A furnished holiday let (FHL) is a type of rental property that is furnished and available for short-term holiday rentals. This type of accommodation is subject to specific tax rules and regulations that differ from those applicable to other types of residential property rentals.
The holiday rental market is competitive, and maintaining high standards is crucial for attracting and retaining guests. Reinvesting the tax savings back into your FHL can help you maintain and upgrade the property, enhancing its appeal to guests. Whether it’s updating furnishings, improving amenities, or making necessary repairs, the additional funds can ensure your property remains competitive and attractive to renters.
In the Spring Budget 2024 the previously in power conservative party stated that this tax regime would be abolished from April 2025. However, there was no provision for this in the Finance Bill 2024 and thus it is currently unknown whether the current government will continue with this abolishment.
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Was the total value of UK Capital Allowances claims minus balancing charges in the 2021 to 2022 financial year (HMRC Stat).
In the UK, capital allowances are categorized into different “pools” which determine the rate at which you can claim tax relief on your capital expenditures. Here are the primary cost pools for claiming UK capital allowances:
This pool typically includes most plant and machinery used in a business. The main pool qualifies for the Writing Down Allowance (WDA) at a rate of 18% per year on a reducing balance basis. Examples include:
Furniture, cleaning equipment, portable lamps, maintenance equipment, kitchen installations, sanitary ware etc.
The special rate pool includes assets that have a slower depreciation rate and qualifies for the WDA at a rate of 6% per year on a reducing balance basis. This pool covers:
Lighting, heating systems, air conditioning, ventilation systems, etc.
Introduced for contracts entered into on or after October 29, 2018, the SBA allows businesses to claim 3% per year on the cost of constructing, renovating, or converting non-residential structures and buildings. This allowance is claimed on a straight-line basis over 33 1/3 years.
Furnished holiday lets are NOT eligible to claim Structures and buildings allowances as they were specially carved out of the SBA legislation.
Capital allowances are available for furnished holiday lets on expenditure relating to their fit out and refurbishment. Qualifying items can include pieces of plant and machinery such as kitchen equipment, wardrobes, beds, kitchen cupboards and surfaces. Allowances are also available for a variety of integral features such as electrical systems, heating and ventilation, and hot and cold-water systems. It is worth noting that Structures and Buildings Allowances are not available for this type of property.
For a let property to qualify as a furnished holiday let it must abide by the following rules:
• It must be In the UK or in the European Economic Area (EEA) – the EEA includes Iceland, Liechtenstein and Norway • Furnished – there must be sufficient furniture provided for normal occupation and your visitors must be entitled to use the furniture • The property must be commercially let (you must intend to make a profit). If you let the property out of season to cover costs but did not make a profit, the letting will still be treated as commercial.
In addition to the above the property must also pass three occupancy conditions:
• The total of all lettings that exceed 31 continuous days cannot be more than 155 days during the year. • Your property must be available for letting as furnished holiday accommodation letting for at least 210 days in the year. • You must let the property commercially as furnished holiday accommodation to the public for at least 105 days in the year. You cannot include days where the property was let to friends or relatives at zero or reduced let. You cannot include longer-term lets of more than 31 days unless the 31 days is exceeded due to unforeseen circumstances.
Our team comprises seasoned tax professionals and surveyors with extensive experience in the nuances of capital allowances. We stay abreast of the latest legislation and best practices, ensuring you receive the maximum relief available.
We conduct thorough assessments of your capital expenditures, meticulously identifying all qualifying assets. From plant and machinery to integral building features, our detailed approach ensures nothing is overlooked.
COFFEE SHOPS & CAFES
PUBS & RESTAURANTS
HOTELS
CARE HOMES
INDUSTRIAL & FACTORIES
OFFICES
NURSERIES & CHILDCARE
FURNISHED HOLIDAY LETS
WAREHOUSES
DOCTORS OFFICES & SURGERIES
RETAIL STORES
TRANSPORT & LOGISTICS
DENTISTS
VETS
FARMS & AGRICULTURAL
COMMERCIAL CONSTRUCTION
Claiming capital allowances may seem hard at first, but at the BSE Group, we’re here to help you through the process. Our time within the financial field has given us the expertise needed to help your business claim tax relief. Unlock the hidden value in your capital expenditures with our help.
Contact us today for a free initial consultation and see how our Capital Allowance Team can transform your tax strategy and enhance your financial performance.
