Richard Curtis considers the forthcoming changes to the taxation of furnished holiday lettings.
For many years, furnished holiday lettings (FHL) have benefited from several tax benefits. Generally, income from property is treated as investment income, but FHL income is treated as trading income.
To qualify as a furnished holiday let, properties:
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must be available for short-term letting to the public for 210 days and actually let for 105 days or more in each tax year; and
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should not be used as a long-term let of over 31 days for significant periods.
For income tax purposes, the income from qualifying properties could be reduced by capital allowances, as well as the full cost of related mortgage or loan interest. Also, contributions to a pension plan could be deducted from such income – all advantages over other property
