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Furnished holiday let - first year of trading

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My client has acquired a property with the intention of renting it out as a furnished holiday let.  It meets the availability and pattern of occupancy conditions but is likely to struggle to satisfy the 105 days let condition in the first year - it's a start-up and it will take time to build the business.

Averaging is not an option (no other FHLs owned) and on the period of grace election HS253 states "You can make an election where the property met the letting condition in the year before the first year you wish to make a period of grace election", which is fine and dandy, except that there is no year before - it's the first year of trading.

Seems a tad harsh on someone trying to build up a FHL business.  Is there any other recognition of the challenge of hitting that letting condition in the first year?

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By tonycourt
19th Aug 2019 16:46

Have you taken into account that the relevant period over which to measure the letting conditions is not the tax year but the twelve months starting from the date is was first let ?

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By nsorelli
19th Aug 2019 17:25

Yes, that's understood. Seems a little inconsistent, though, that there's a recognition that hitting that 105-day criterion can sometimes be difficult (hence averaging and period of grace elections) but no reference to it in that first 12-month period.

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