Stephens Scown
Stephens Scown are one of the leading firms of solicitors based in Devon and Cornwall offering a broad range of expert business and personal legal services, with over 30 partners and 230 staff based in offices in Exeter, St. Austell and Truro.
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17 June, 2011
At the end of last year, the
Government published draft clauses for its Finance Bill 2011,
including proposed revisions on Furnished Holiday Lettings (FHL).
Richard Baker of Stephens Scown solicitors examines what
this means for farmers who own properties in the South West.
With the new tax revision having taken effect from April this
year, holiday property owners in the Westcountry may need to review
their situation as soon as possible. Farmers who lease out cottages
or other farm buildings will be affected by the FHL changes - they
may have to change the way they operate or risk losing valuable tax
reliefs. The amendments are being introduced to bring the UK into
line with EU law.
Before April, provided the holiday accommodation was run
commercially, as opposed to a hobby or let only to friends and
family, FHL rules allowed owners to treat the property or
properties as a trade rather than investment. It meant owners could
qualify for loss relief against general income, capital allowances
on plant and machinery and certain Capital Gains Tax (CGT)
reliefs.
The law changed with the Finance Bill 2011 so that:
- The minimum period over which a qualifying property must be
available for letting to the public in the relevant period is
increased from 140 days to 210 days in a year from April 2012;
- The minimum period over which a qualifying property is actually
let to the public in the relevant period is increased from 70 days
to 105 days in a year from April 2012;
- Losses made in a furnished holiday lettings business may only
be set against income from the same furnished holiday lettings
business; and
- A 'period of grace' was introduced to allow businesses that
don't continue to meet the 'actually let' requirement for one or
two years to elect to continue to qualify throughout that
period.
It's really important that people get the right professional
taxation advice at the earliest opportunity if they're unsure about
how this might impact upon them. Some businesses may need to
undertake additional valuations and other calculations and we would
always advise doing this sooner rather than later.
For more information about furnished holiday lettings, contact
Richard Baker on 01872 265100.
