The Budget 2009 contained announcements about significant changes to the rules for furnished holiday lettings (FHL) but those who are affected may have to act fast. The main announcements are set out below:
- Extension of the furnished holiday lettings scheme to properties in the European Economic Area (EEA) (previously it was thought that the property had to be in the United Kingdom). This change is being made due to the possible incompatibility of the rules with European law.
- The removal of the scheme, and its advantageous tax treatments, completely from April 2010. Unlike general property rental businesses, FHL are treated as a trade for certain taxation purposes, which is generally more preferential in terms of loss and capital gains tax reliefs.
It may be worthwhile making claims for FHL treatment for properties in the EEA including those for which tax returns have already been submitted and where the property has actually been disposed of in the last few years.
HMRC have indicated that, in the correct circumstances, late claims and amendments will be accepted in relation to this matter. The first deadline is 31 July 2009, although later deadlines may apply in certain circumstances.
If you believe you may have or have had a property which qualifies for FHL treatment, please do get in touch.
Source: HMRC Budget guidance