Furnished holiday let

FHL owned by wife only - can profits be split between H & W

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Husband and wife want the income from their holiday home within the EEA to be considered under 'furnished holiday let' rules (tests re occupancy etc are fulfilled).  However, the property is only vested in the wife's name.  Having looked at HMRC guidance I see that FHL income is treated differently to buy to let and does not need to be allocated in accordance with % ownership.  Can the income from the FHL be split between H/W (husband would probably take bigger % as wife is knocking on the door of being a higher rate tax payer) in this instance?

Thanks very much for any guidance given.

 

 

Replies (4)

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Stepurhan
By stepurhan
15th Nov 2023 13:45

"Does not need to be allocated in accordance with % ownership" is not the same as "can be allocated to someone with no interest in the property at all".

That is your starting point. There are various ways of addressing that point, and which will suit this couple will depend on other factors, not all of them tax-based.

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Replying to stepurhan:
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By jane
17th Nov 2023 09:28

Thanks for the reply / guidance - I probably thought that was the case - I thought I'd ask because 'property' detailed in a partnership balance sheet is not necessarily legally owned by the partners of the business.
Is it safe to say that therefore that only some of the 'reliefs' available to 'business' apply to FHL?
Thanks again.

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Replying to jane:
Stepurhan
By stepurhan
20th Nov 2023 15:08

I'm saying that in a partnership you could not allocate a share of profit to someone that is not a partner. Whilst a partnership agreement may include provisions re introduced assets and how profits on them are split, assets the partners do not own would not appear on a partnership balance sheet.

Your OP said that the property is solely owned by the wife. If the husband is not a "partner" in the FHL, then he cannot be allocated a share of the income in the FHL.

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Replying to stepurhan:
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By jane
20th Nov 2023 15:42

Hello again and thanks for replying - I've had sight of the Greek tax return - all assessed on & paid by the wife and claim made under 'DTA' in her name in the SATR to 5 Apr 2023.
It is only in the current year (which will be UK tax year ended 5 Apr 2024) that the FHL tests have been complied with. However, assuming that the Greek tax return to Dec 2023 remains the same assessed on her alone then I think the requisite course of action in the UK is to detail the income & DTA claim on her return only.
They advise there is no 'reason' why the Greek property in her name alone - to alter that will be a decision for them with many other issues to consider - FHL being the least of them.
Thanks very much for the help.

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