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Latest News - CAPITAL ALLOWANCES TAX RELIEF FOR FURNISHED HOLIDAY LETS
 

Don’t lose the opportunity to utilise FHL (furnished holiday lets)  losses against other income. A Capital Allowances claim is still possible for 2010/11 but only until 31 January 2013.

Capital allowances are a tax relief available when buying, constructing or improving your furnished holiday let. The relief enables individuals or businesses that pay UK tax to deduct the cost of certain types of expenditure from their taxable income, thereby reducing the amount you pay tax on. Capital Allowances can be worth as much as 20-30% of the purchase price.

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A FHL is a furnished property located in the UK or EEA that is available for holiday lets on a commercial basis for at least 210 days per year and is actually let for at least 105 days per year. The total periods of longer term occupation, or letting to the same person for more than 31 continuous days, must not exceed 155 days during the year.

 

The expenditure can include fixtures and fittings like carpets, curtains, air conditioning, swimming pools, sanitary ware, kitchens, heating, emergency lighting and wiring to fixed plant, fire equipment, telecommunication installations, signs and security systems. The list of qualifying items is lengthy.

Capital allowances can generate a tax loss and until 2011/12 these losses could be used against income from any other source, generating a sizeable income or corporation tax refund.

Because a tax return can be amended retrospectively, the 2010/11 tax return can still be amended to include a claim for Capital Allowances.   If you actually purchased the FHL in 2010/11 then you could also make a double tax benefit.

From 2011/12 onwards any losses can only be offset against profits from the FHL business or carried forward to utilise against profits from the same FHL. Regardless of the changes, if your FHL is profitable then a Capital Allowances claim can help reduce your on-going tax liability for many years to come.

So make the most of this last opportunity to claim Capital Allowances and generate a valuable tax refund.If you need to know more about any of this, contact The Gite Doctor's dedicated accountanting consultant expert Christa Doody via the contact page on our site.

 
 

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