Furnished Holiday Lettings consultation: our response

AcountingWEB.co.uk Tax Editor Rebecca Benneyworth has compiled the community’s feedback on the FHL rules consultation paper and submitted them to HMRC. Here is an outline of what she said.

We ran two technical articles on the proposed new Furnished Holiday Lettings regime during the summer, which attracted nearly 11,000 hits and 36 comments.

Members were generally supportive of the proposal to increase the required period for which properties are available for letting as holiday accommodation. However most of those who expressed a view were concerned that the extension of the actual let condition was likely to mean that many operators in the UK (including those with a commercial multi-property set up) would not be able to meet the conditions.

Members considered that curtailing loss relief was essential where the FHL was essentially a holiday home for the owner with letting as a sideline. However, operators in the UK expressed concern about the restriction of loss relief; the proposals are more restrictive than currently apply to a normal letting activity, which does seem to be unfair.

While the changes to the capital allowances rules were understood and regarded as a sensible solution to the current problems, they could give rise to significant additional complexity.

The full consultation response quotes extensively from the points raised by members on the following topics:

• The increased available/lettings time periods
• The amended loss relief provisions
• The capital allowances proposals

Our article Furnished Holiday Lettings: your views needed set out a proposal for a regime which grants full trading status to operators running a genuine business; remaining holiday lets might then either fall into normal letting rules, or alternatively might qualify for a “new FHL” treatment with the proposed restriction of loss relief.

Operators need certainty about the tax regime that applies to them, as this will affect decisions to invest both in the business as a whole, and in repairs and capital items from year to year. The current proposals do not offer that certainty and as such present huge problems to the industry as a whole (apart from those investors who are essentially buying a second home and making a small income on the side from it).

This proposal was put forward and was well received by members. We will now have to wait and see whether HMRC and the Treasury take the same view.

Download our full consultation response (68kb PDF) to see the full details – or refer to our previous Furnished Holiday Lettings coverage.

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