Furnished Holiday Lets (FHL)

Unlike other properties, FHL’s benefit from a number of tax advantages including capital allowances on domestic items and full deductibility of mortgage interest. FHL’s also benefit from Capital Gains Tax (CGT) reliefs on disposals including Business Asset Disposal Relief, Rollover Relief and Holdover Relief.

For a property to qualify as an FHL for the year ended 5 April 2023, the following conditions must be satisfied:

• The property must be let on a commercial basis with a view to profit.

• The property must be located in the UK or the European Economic Area.

• The property must be sufficiently furnished to provide for normal occupation.

• The property must be available to let for 210 days.

• The property must be let for 105 days (the letting condition).

• The total of all lettings that exceed 31 continuous days cannot be more than 155 days in total.

Where a taxpayer has multiple FHL’s and the letting condition is not met for at least one of the properties, then an averaging election can be made whereby the letting condition is applied to the average rate of occupancy across all of the taxpayers FHL’s for a given year.

A taxpayer can also make a period of grace election which allows the property to qualify as an FHL for a given year even if the letting condition is not met. A period of grace election cannot be made for more than two consecutive years.

If you are not sure of the steps that you need to take to ensure that your property continues to qualify then your local Whitings contact will be here to help.

Disclaimer - All information in this post was correct at time of writing.