How does taxation of furnished holiday lets work?

Understanding the taxation landscape for furnished holiday lets (FHLs) in the UK is essential for hosts looking to maximise their earnings while staying compliant.

Here's a streamlined guide to the key aspects of FHL taxation:

Qualification Criteria
To qualify as an FHL for tax purposes, your property must be available for rent for 210 days or more per year and rented out for 105 days or more. These criteria ensure your property is eligible for the tax benefits associated with furnished holiday lets.

Tax Advantages
FHLs benefit from several tax reliefs, including Capital Gains Tax exemptions and the opportunity to claim capital allowances. Profits from FHLs are calculated in a similar manner to trading income, offering potential tax efficiency.

Income Tax & Allowances
Income generated from FHLs falls under Income Tax. However, hosts can reduce their taxable income by deducting allowable expenses and claiming relevant allowances, decreasing the overall tax liability.

Council Tax vs. Business Rates
Depending on how your FHL is used, it may be subject to business rates instead of council tax. FHLs meeting certain conditions might be eligible for Small Business Rate Relief, further reducing tax expenses.

Seek Professional Guidance for FHL Taxation

The tax landscape for furnished holiday lets combines distinct benefits with specific responsibilities. To navigate these effectively, consider consulting with a tax professional. Additionally, check out HS253 for more detailed guidance on FHL taxation rules.

Connect with EPE Group

Ensure your furnished holiday let is both profitable and compliant by seeking expert advice. EPE Group is here to offer specialised support for your FHL, helping you understand and meet all tax obligations.