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Lake side holiday home

Furnished holiday letting in the time of Covid


As the further easing of lockdown restrictions enables the re-opening of the accommodation sector, Chris Williams summarises the key conditions surrounding furnished holiday letting (FHL).

17th May 2021
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Last year furnished holiday landlords faced a bleak summer as the Covid-19 pandemic threatened to wipe out their year. In the event the late summer relaxations provided some respite but the sector was hit hard by a shortened season, travel restrictions and general uncertainty.

These difficulties produced two tax issues for FHL landlords because reduced occupancy and availability threatened to disapply FHL treatment as trading for both income tax and corporation tax on income, and consequently entrepreneurs’/business asset disposal relief from capital gains tax.

Cashing in on a glorious summer?

The easing of lockdown (new strains permitting) and uncertainties over holidays abroad  appear to be fostering an upsurge in holidays in the UK, offering FHLs the prospect of a boom and very benign CGT treatment through business asset disposal relief (BADR) on exit.

FHL qualification essentials

To qualify for FHL treatment in any tax year a property must:

  • be available for letting for at least 210 days;

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Replies (3)

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By Abacus1812
17th May 2021 11:17

Personally, as somebody who also owns a FHL, I would disagree entirely with the premis that it was 'a bleak summer' last year. FHL owners (well, 'legal' owners who pay business rates) have so far received grants to a value of a minimum (lowest rateable value) of £26,573 since Covid began - hardly bleak.

Thanks (1)
By Arbitrary
17th May 2021 11:41

What about 'availability' where it would be illegal to let in 2020/21?

Thanks (0)
By [email protected]
28th Jun 2021 10:31

Whilst there were enough "open" months in 2020 for most holiday home owners to achieve their 105 days, there may be cases where owners, through no fault of their own, were unable to reach that threshold because they were forced to close for part of the year by regulations. The Holiday Home Association would like to hear from owners who are in this position so we can press HMRC for a relaxation if necessary. Replies here will be noted or we can be contacted online, of course.

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